CBN Takes Bold Step, Sells $197.71m to Tackle FX Liquidity Crisis

CBN Takes Bold Step, Sells $197.71m to Tackle FX Liquidity Crisis

In a decisive move to calm Nigeria’s volatile foreign exchange market, the Central Bank of Nigeria (CBN) has injected $197.71 million into the system. The sale was made to authorised dealers to boost dollar availability and ease pressure on the naira.

This intervention, which came on the heels of three consecutive days of naira depreciation, underscores the apex bank’s resolve to stabilise the market amid mounting economic concerns.

Omolara Omotunde Duke, the Director of the Financial Markets Department, confirmed the sale in a statement issued on Friday, April 4, 2025.

“This measured step aligns with the Bank’s broader objective of fostering a stable, transparent, and efficient foreign exchange market,” Duke stated, noting that liquidity support is crucial now more than ever.

The naira took a serious beating in recent days. In just three trading sessions, it lost N35.77 against the US dollar in the official FX window. The main driver? Soaring demand and tight dollar supply.

This isn’t just Nigeria’s headache. The FX stress comes at a time when several emerging economies are grappling with the aftermath of global shifts. The U.S. government’s sudden announcement of new import tariffs on selected nations has rattled many markets.

As foreign investors and central banks recalibrate, the ripple effect has hit Nigeria hard. Especially for an oil-dependent economy, weakened crude prices haven’t helped matters either.

Crude oil, Nigeria’s main foreign exchange earner, has plunged by over 12 percent, trading around $65.50 per barrel. That’s a significant drop and bad news for national revenue expectations.

The CBN, however, says it’s staying on top of the situation.

It noted that the FX market activities between April 3 and 4 reflect not just domestic tensions but wider global macroeconomic disruptions.

Still, the apex bank remains confident in its FX framework.

According to the statement, “The CBN continues to monitor global and domestic market conditions and remains confident in the resilience of Nigeria’s foreign exchange framework, which is designed to adjust appropriately to evolving fundamentals.”

The intervention aims not just to inject liquidity but also to send a clear signal that the central bank is watching—and ready to act.

Market watchers say this could slow the naira’s fall temporarily, but the real test will come in the weeks ahead as international oil prices fluctuate and U.S. trade policy uncertainties linger.

The CBN also warned all authorised dealers to stick strictly to the Nigeria FX Market Code. Any shady dealings, manipulation, or unethical trading will not be tolerated.

“All authorised dealers are reminded to adhere strictly to the principles outlined in the Nigeria FX Market Code and to uphold the highest standards in their dealings with clients and market counterparties,” the statement reads.

This isn’t the first such move by the CBN this year. In March, the bank reportedly mopped up N1.7 trillion in a bid to tame inflation and reduce volatility in the FX space. But analysts argue that without broader reforms in the economy—particularly around export diversification—such injections may only provide short-term relief.

Nigeria’s external reserves have also taken a hit in recent weeks, causing fresh concerns about how long the CBN can sustain these interventions. Some experts believe the time has come to rethink Nigeria’s economic fundamentals—moving beyond oil and into serious non-oil exports.

Others have called on the government to create a more enabling environment for foreign direct investment and diaspora remittances, both of which could shore up the country’s FX inflows.

But while the big-picture reforms are still in political limbo, the CBN seems determined to use every tool in its arsenal to steady the ship.

With consumer goods companies bracing for a possible rebound due to the naira’s recent strengthening in the parallel market and inflation showing signs of easing, there’s cautious optimism that things could improve—if policymakers don’t fumble the ball.

The coming days will test whether this $197.71 million lifeline will ease the current strain or whether the market will swallow it up, only to demand more.

But one thing is clear: the CBN is not sitting back. It’s on the move—watching, waiting, and ready to strike again if needed.