Naira stable as CBN sustains liquidity management auctions
The naira maintained a stable trading band against the US dollar across both official and parallel channels, driven by sustained CBN liquidity management auctions and commercial bank FX supply.
The Nigerian naira maintained a stable trading band against the US dollar across both the official Foreign Exchange Market (NFEM) and parallel channels. Financial analysts attribute the steady valuation to sustained liquidity management auctions by the Central Bank of Nigeria and consistent commercial bank FX supply.
The stability of the naira is a positive sign for the Nigerian economy. The currency has been under pressure in recent years, and the CBN’s efforts to stabilise it appear to be working. The sustained liquidity management auctions have helped to absorb excess naira liquidity, while the consistent FX supply from commercial banks has met demand.
This echoes the 2023 naira stability, which also saw the currency hold steady. The mechanism then was different, but the result was the same: a more stable currency.
The winners: the naira, which has stabilised; and the Nigerian economy, which benefits from exchange rate stability. The losers: the Nigerian public, who have yet to feel the benefits; and the CBN, which must continue to manage the exchange rate.
Bottom Line: The naira is stable against the dollar. The CBN’s liquidity management is working. The question is whether the stability can be sustained.