“CBN Pumps $580m to Lift Naira amid Reserve Drop”

The Central Bank of Nigeria (CBN) injected $580 million into the country’s forex market in May 2025 in a bid to ease pressure on the naira and keep it stable, even as its external reserves fell to $38.045 billion.

The aggressive intervention, which supported the naira’s strengthening trajectory, has raised concerns over its long-term sustainability, with analysts warning that continued drawdowns could undermine reserve buffers.

To ease growing pressure stemming from strong corporate demand for dollars, the CBN kept up its policy of selling directly to authorized banks, adding much-needed liquidity to the market. According to AIICO Capital Limited, the dollar traded within a relatively stable range following these interventions, reflecting growing confidence alongside improved liquidity.

In the first half of May, persistent pressure — stemming from declining oil prices and strong dollar demand, forced the exchange rate toward N1,614 per dollar. The CBN responded by intervening with over $580 million to ease pressure, supported by additional flows from exporters and portfolio investors. This combination helped foster a gradual strengthening of the naira.

The policy intervention was further supported by Moody’s Investors Service’s recent upward revision of Nigeria’s sovereign credit rating, from Caa1 to B3 with a stable outlook, reflecting significant policy improvements, the removal of petroleum subsidies, greater exchange rate flexibility, and enhanced revenue collection mechanisms under President Bola Ahmed Tinubu.

Moody’s also raised the country’s local currency ceiling to Ba3 and its foreign currency ceiling to B2, noting its growing robustness in external buffers and policy framework.

AIICO Capital reported that the dollar traded within N1,575–N1,610 during May, with the naira closing at N1,586.15 per dollar, a 66 basis points improvement. Meanwhile, the parallel market fell by N11, closing at N1,617.50 per dollar due to strong ongoing demand.

Additionally, Nigeria successfully cleared its IMF obligations by May 2025, reducing its IMF debt from $3.54 billion in December 2020 to zero, a major milestone for its financial credibility. The country’s external reserves grew by $364 million between April 30 and May 14, marking its first sustained upward trajectory since January.

Furthermore, diaspora and other remittances routed through International Money Transfer Operators jumped 44.5% to $4.76 billion in 2024, up from $3.30 billion in 2023, adding additional depth to the country’s financial buffers.

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