CBN continues to inject dollars into currency market

The Central Bank of Nigeria has remained committed to injecting foreign exchange into the market, with recent interventions totaling $195 million. This follows a significant $462.3 million injection just last week, showcasing the apex bank's efforts to stabilize the forex market in Nigeria. In an exclusive interview with CNBC Africa, Chioma Udu, a Forex Dealer at GT Bank, provided insights into the current state of Nigeria's FX space. The discussion revolved around the performance of the Naira, price discovery, convergence of exchange rates, and the impact of CBN's interventions on the market. Udu highlighted the increase in inflows, particularly in the INE window, as investors show interest in Nigerian assets and equities. With transparent price quoting, market participants can make informed trading decisions, fostering market efficiency and liquidity. The ongoing convergence of exchange rates is seen as a positive step towards a unified rate, simplifying price discovery and enhancing investment decisions. Amid concerns about sustainability, Udu expressed confidence in CBN's consistent interventions and retail auctions, which have provided support and stability to the FX market. The INE window emerged as a key reference point due to its liquidity and balanced supply-demand dynamics, signaling improved market conditions and reduced parallel market disparities. Foreign investors have shown a growing interest in medium to long-term investments, including bonds and equities, benefiting from increased access to FX at the INE window. The stability in the FX market has also positively influenced the fixed income segment, with CBN's liquidity management strategies helping to ease pressure on the Naira. Despite occasional liquidity tightness, Udu anticipated a favorable trend with reduced rates following upcoming maturity and CBN interventions. The attractiveness of Nigerian yields is expected to drive further FX inflows and support a stable FX window. Looking ahead, Udu predicted a shift from bearish bias to improved market sentiment as liquidity improves and auctions proceed smoothly throughout the week. With a focus on maintaining tight liquidity to support the Naira, CBN's proactive measures are projected to sustain market stability and investor confidence in Nigeria's FX and fixed income markets.