CBN Injected $4.1bn Into FX Market in H1 2025 to Defend Naira – Report

The Central Bank of Nigeria (CBN) injected $4.1 billion into the foreign exchange (FX) market in the first half of 2025, more than tripling the $1.3 billion it supplied during the same period in 2024. The move is part of the apex bank’s aggressive strategy to stabilise the naira and ease liquidity pressures in the currency market.

This was disclosed in the CSL Stockbrokers’ H2 2025 Outlook, which highlighted a 215% year-on-year surge in FX interventions. CSL, a member of the FCMB Group, attributed the spike to increased efforts to cushion the naira against persistent volatility, weak capital inflows, and subdued oil earnings.

Despite the interventions, Nigeria’s gross external reserves dropped by $3.67 billion in H1 2025 from $40.88 billion in January to $37.21 billion in June, reflecting the cost of sustained FX support. By contrast, reserves increased by $1.17 billion in the same period in 2024.

Naira’s Slight Rebound

According to CSL, the naira opened 2025 at N1,535/$ in the official market and appreciated slightly to N1,530/$ by end-June, marking a modest 0.4% year-to-date gain. This stability was largely attributed to CBN’s consistent dollar injections.

The largest intervention occurred in April, when investor anxiety over new U.S. trade tariffs caused the naira to briefly depreciate to N1,630/$. In response, the CBN sharply increased FX supply to stabilise the market.

However, analysts remain cautious. CSL warned that Nigeria’s ability to sustain its currency defence is under pressure due to falling oil revenues, weak foreign investment inflows, and limited access to external financing.

Oil, Capital Flows, and Investment Sentiment

According to the report, Oil exports, Nigeria’s key FX earner are projected to decline by 20% in 2025 to $36.4 billion, due to lower prices and production constraints. While foreign participation in the equities market rose to 29% by May 2025 (up from 20% in 2024), capital outflows continue to exceed inflows, suggesting foreign investor caution remains.

Looking ahead, CSL anticipates FX inflows will stay weak in H2 2025, limiting further naira appreciation. The report estimates the fair value of the naira at N1,647/$, based on valuation models such as Purchasing Power Parity and Interest Rate Parity.

Interest Rate Cuts, Inflation Outlook

CSL projects that the CBN may cut interest rates by 100 to 150 basis points in Q4 2025, as inflationary pressures ease. While this could stimulate growth, it may also reduce the appeal of naira assets, risking renewed depreciation of the currency.

Inflation is forecast to average 22.9% in 2025, down from 31.4% in 2024, thanks to relative exchange rate stability and base-year effects.

The report revised Nigeria’s 2025 GDP growth projection down to 3.7% from 3.9%, citing sluggish consumer spending and weak net exports. It also warned that the budget deficit could widen to 5.8% of GDP, well above the official estimate of 3.9%, as government revenues underperform.

This could trigger increased domestic borrowing, adding strain to public finances.

FX Defense to Continue

The CBN is expected to maintain FX support in H2 2025, keeping the naira trading between N1,500 and N1,600/$, provided no major shocks occur. Still, the sustainability of this defence strategy remains in question unless FX inflows pick up through stronger oil revenues, renewed capital market interest, or external financing deals.

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