The Central Bank of Nigeria (CBN) injected around $669 million into the foreign exchange market during the first quarter of 2025 to defend the naira from further depreciation. According to a report by investment firm AIICO Capital Limited, these dollar sales—totaling $668.8 million—came amid declining dollar inflows and increasing offshore demand for foreign exchange.
Despite these interventions, the naira continued to face significant pressure. It depreciated by 2.97% in March, dropping from ₦1,492.49/$ to ₦1,536.82/$. The exchange rate began the month at ₦1,510/$, with rising demand, particularly from foreign portfolio investors and local businesses, weighing heavily on the market. The parallel market reflected similar challenges, as the naira weakened by ₦43.50 to close at ₦1,536.00/$.
To help stabilize the parallel market, the CBN directed Bureau de Change operators to purchase $25,000 from authorized dealer banks at the official exchange rate. However, despite these efforts, Nigeria’s external reserves fell to $38.31 billion by the end of the quarter, reversing from a three-year high of $43 billion due to debt service payments and ongoing dollar sales.
The AIICO report also noted that although mid-month liquidity was temporarily boosted by the CBN’s dollar injections, it wasn’t enough to meet the persistent demand in the Nigerian Foreign Exchange Market. As a result, the naira remained under pressure despite the central bank’s interventions and modest improvements.
This currency volatility is occurring amidst global economic instability, with President Donald Trump’s new tariffs adding to investor concerns. As global stock markets dropped on Monday, emerging market currencies, including the naira, came under additional strain.