The Central Bank of Nigeria injected a total of $4.1bn into the foreign exchange market in the first half of 2025, a move aimed at stabilising the naira and easing liquidity pressures in the currency market.
This figure, which is more than three times the $1.3bn recorded during the same period in 2024, was contained in the latest CSL Stockbrokers’ H2 2025 Outlook report. According to an analysis of the data from the report, there was a 215% increase. CSL Stockbrokers Limited is a member of FCMB Group and also a member of the Nigerian Stock Exchange.
This came as industry analysts expressed concerns over the sustainability of the currency defence strategy, citing weak oil earnings, subdued foreign portfolio investment inflows, and uncertainties around external financing.
However, members of the Organised Private Sector argued that no responsible central bank would allow market forces to solely determine the value of its currency without some form of intervention to ensure stability.
Also, The PUNCH observed that Nigeria’s gross external reserves fell by $3.67bn in the first half of 2025, based on data obtained from the Central Bank of Nigeria.
According to the CSL Stockbrokers’ report, the CBN’s aggressive intervention reflects a stronger commitment to defending the naira amid persistent volatility and weak capital inflows. The naira, which opened the year at N1,535 to the US dollar in the official market, appreciated slightly to N1,530/$ by the end of June, supported largely by these FX injections.
The report read, “The local currency, which opened the year at around N1,535/$ in the official market, posted a marginal appreciation to close the first half at around N1,530/$, reflecting a YTD gain of 0.4 per cent. This relative stability was largely underpinned by sizable interventions from the CBN, which we believe helped contain depreciation pressures, especially during periods of heightened volatility.
“Notably, the apex bank injected about $4.1bn into the FX market in H1 2025, well above the $1.3bn provided during the same period last year, demonstrating a stronger commitment to supporting market liquidity.”
CSL noted that the apex bank’s interventions were most pronounced in April, when the naira temporarily weakened to N1,630/$ following heightened investor risk aversion triggered by the announcement of new US trade tariffs.
“It is worth highlighting that in April, when foreign currency inflows were limited and the exchange rate temporarily weakened to as high as N1,630/US$, amid investor risk aversion triggered by the announcement of US trade tariffs, net FX inflows from the CBN surged to the highest level so far this year,” the report stated.
Despite the interventions, CSL expressed concerns over the sustainability of the currency defence strategy, citing weak oil earnings, subdued foreign portfolio investment inflows, and uncertainties around external financing.
Oil exports, which accounted for roughly 86 per cent of Nigeria’s total exports in 2024, are projected to fall by 20 per cent year-on-year to $36.4bn in 2025 due to lower prices and production constraints. On the capital market front, the report highlighted that foreign participation in Nigeria’s equities market rose to 29 per cent as of May 2025, up from 20 per cent in the same period of 2024.
However, foreign outflows continued to outpace inflows, indicating lingering investor caution. Looking ahead, CSL warned that FX inflows could remain under pressure in the second half of the year, thereby limiting the scope for further appreciation of the naira.
The investment firm also projected that the CBN may begin cutting interest rates by 100 to 150 basis points in the fourth quarter of the year, as inflationary pressures ease. While such a move could stimulate economic activity, it may also weaken the naira by reducing the appeal of naira-denominated assets to foreign investors.
CSL further warned that a more accommodative monetary stance could narrow the carry trade margins that typically attract capital inflows. Nonetheless, the report noted that recent upgrades to Nigeria’s sovereign credit ratings and ongoing discussions around the country’s re-entry into the JP Morgan Emerging Market Bond Index and the MSCI Frontier Markets Index could boost investor confidence and support FX inflows in the months ahead.
Using a blend of valuation models, including Purchasing Power Parity, Real Effective Exchange Rate, and Interest Rate Parity, CSL estimated the fair value of the naira at N1,647/$ — slightly lower than its previous estimate of N1,687/$.
However, it stressed that these models are more appropriate for long-term assessments. The report added, “We believe that the central bank will remain committed to defending the Naira, which could allow the exchange rate trade between the N1,500-N1,600/US$ band in the second half of the year.
“However, without a material improvement in FX inflows, either through stronger oil revenues, renewed FDI and FPI momentum, or access to external financing, the sustainability of the defence strategy could come under increased scrutiny in the next six to twelve months.”
Beyond the currency markets, the report offered a mixed outlook for the broader economy. Real Gross Domestic Product growth for 2025 was revised down to 3.7 per cent from an earlier estimate of 3.9 per cent, with consumer spending and net exports identified as key drags.
Inflation is expected to average 22.9 per cent, significantly lower than the 31.4 per cent recorded in 2024, aided by improved exchange rate stability and base-year effects. On the fiscal front, CSL projected that the 2025 budget deficit could widen to 5.8 per cent of GDP — well above the official forecast of 3.9 per cent — on the back of revenue shortfalls from both oil and non-oil sources.
The firm anticipates increased domestic borrowing by the government in the second half of the year to fill the gap, which could further strain public finances.
In a related development, it was observed that Nigeria’s gross external reserves fell by $3.67bn in the first half of 2025, according to data obtained from the Central Bank of Nigeria. Figures indicate that the reserves, which stood at $40.88bn as of January 2025, declined to $37.21bn by the end of June.
This represents a significant reversal compared to the same period in 2024, when reserves rose from $33.02bn in January to $34.19bn in June, marking an increase of $1.17bn. The reserve drawdown in 2025 may be linked to increased foreign exchange demand, persistent pressures from external debt repayments, and a possible shortfall in expected inflows from oil sales and remittances.
Analysts believe the sharp decline could also reflect the CBN’s interventions in the foreign exchange market to stabilise the naira. Reacting to the report, Lagos-based economist, Mr Adewale Abimbola, explained that Nigeria currently operates a managed float exchange rate regime, where market forces largely determine the exchange rate, but with room for regulatory intervention to prevent excessive volatility.
“Well, we practised a managed float exchange rate system, where the naira is allowed to oscillate against the dollar but with regular intervention to ensure stability,” he said.
“CBN’s regular intervention in the FX market has in no small measure provided stability. In the absence of CBN intervention, I think we would have seen much more volatility in the naira. Although FX inflows have improved lately, even as FX demand has dropped (owing to domestic refining).”
On whether the naira can survive without the CBN’s support, Abimbola said Nigeria is not there yet. “Can the naira survive in the absence of CBN intervention? I think we are not there yet. Much more needs to be done to boost non-oil sources of FX inflows. We need to scale value addition in our manufacturing and agricultural exports. But for now, I would say CBN intervention is still needed for stability.”
The PUNCH earlier reported that the naira extended its recent gains on Monday, strengthening to a four-month high against the US dollar to close at 1518/$ on the official market, the Nigerian Foreign Exchange Market.
Data from the Central Bank of Nigeria revealed that the naira gained 0.74 per cent to close at 1518/$ on Monday. This marks the naira’s strongest performance since March 14, 2025, and the first time it traded below N1520/$ since that period, signalling a wave of positive momentum for the nation’s currency.
Analysts at Anchoria Limited in its market update have projected that the naira would trade within a stable range of 1515–1535/$ this week. Pegging their projection on improved FX liquidity and renewed CBN intervention, including last week’s $50m sale and a successful OMO auction that attracted foreign investor interest.
“These actions have helped ease demand pressures and boost market confidence, keeping volatility low,” Anchoria Limited said in a note.
Also, Cowry Assets Management Limited, in its weekly market report, also projected a positive and stable outing for the naira this week, anchored on continued “CBN intervention, FX reforms gaining traction, and steady oil export revenues; the groundwork is gradually being laid for currency recovery and improved market sentiment.”
Also reacting, the Managing Director and Chief Executive Officer of Arthur Stevens Asset Management Limited, Mr Olatunde Amolegbe, said the FX regime under Governor Yemi Cardoso was fundamentally different from what was practised during the tenure of Godwin Emefiele.
He added that the scale of current interventions is an indication that the market is more functional than before. “Although people call it intervention, what I see whenever the CBN participates in the foreign exchange markets is that it is playing one of its primary roles, which is price stability,” he said.
