CBN cuts FX interventions by 83% to $150m in April as naira faces pressure

Foreign exchange interventions by the Central Bank of Nigeria (CBN) fell sharply by 83 per cent in April, declining to $150 million and placing renewed pressure on the naira despite improved inflows into the market.

By the end of April, the naira was trading at N1,374.94 to the dollar, with total foreign exchange injections in the official market limited to $150 million.

The relatively stable performance of the currency during the period was supported by increased foreign exchange inflows, including funds from foreign portfolio investors, as well as dollar supply from non-bank corporates and exporters, which helped to bolster market liquidity.

In March, the apex bank had injected $895 million into the market to support liquidity in the official foreign exchange window. The significant drop in April reflects a deliberate scaling back of interventions, even as outflows continued to weigh on external reserves.

Nigeria’s gross external reserves declined to $48.367 billion from $49.238 billion at the start of April, reflecting pressures from foreign debt servicing, reduced interventions and other related outflows.

In the global oil market, crude prices maintained an upward trajectory, driven by ongoing geopolitical tensions around the Strait of Hormuz. Despite Iran’s announcement of a restricted reopening and claims by the United States of progress, disruptions to oil flows have persisted, keeping markets on edge.

Brent crude rose by 9.86 per cent week-on-week to close at $117.04 per barrel, after reaching a high of $118 during the week. This pushed its year-to-date return to 77.76 per cent, underlining the continued rally fuelled by supply uncertainty.

Nigeria’s Bonny Light crude outperformed global benchmarks, climbing by 10.38 per cent week-on-week to $134.86 per barrel, its highest level since 2022. This lifted its year-to-date gain to 112.65 per cent, supported by tight supply in the Atlantic Basin and strong demand for light sweet crude.

Analysts said the ongoing diplomatic deadlock, coupled with Iran’s actions to restrict uncoordinated shipping through the Strait of Hormuz and continued pressure on Iranian ports, suggests that a near-term resolution remains unlikely.

Meanwhile, the United Arab Emirates’ decision to exit OPEC, with the possibility of increasing production outside quota limits, has done little to ease concerns, leaving global oil prices elevated.