CBN OMO auctions buoy naira despite $1.14bn reserves decline

THE naira recorded gains across the four trading sessions of the week, supported by the Central Bank of Nigeria’s (CBN) aggressive liquidity tightening through Open Market Operations (OMO). The move helped attract foreign portfolio inflows and strengthened demand for the local currency.

Data from the CBN indicated that the naira appreciated by N23.90 week-on-week to settle at N1,356.89 per dollar on Friday at the Nigerian Foreign Exchange Market (NFEM) window, compared to N1,380.79 before the Easter break, representing a 1.76 percent gain.

On a daily basis, the currency strengthened by N12.43 or 0.92 percent from N1,359.32 on Thursday. Over the four trading days, it rose from N1,386.66 on Tuesday to N1,356.89 on Friday, marking a total gain of N29.77 or 2.19 percent.

In the parallel market, the naira also appreciated, gaining N10 week-on-week to close at N1,400 per dollar on Friday, up from N1,410 previously. Day-on-day, it improved by N5 from N1,405 quoted on Thursday.

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Despite the broad appreciation, the gap between the official and parallel market rates widened to N44 per dollar, compared with N30 recorded the previous week.

Market participants linked the currency’s performance to the CBN’s OMO auctions, which absorbed a total of N2.31 trillion during the week. The liquidity mop-up typically encourages foreign investors to bring in dollars to participate, thereby supporting the naira.

An analyst noted that OMO auctions often trigger currency appreciation, as foreign portfolio investors inject dollars into the market to take positions in high-yield instruments, according to BusinessDay.

Foreign reserves’ decline

However, the gains came amid sustained pressure on Nigeria’s external reserves. CBN data showed reserves declined by $1.14 billion to $48.88 billion as of April 8, 2026, representing a 2.28 percent drop from $50.02 billion recorded on March 11.

A report by Comercio Partners noted that the foreign exchange market remained relatively stable in March despite mild depreciation pressures. The naira traded within a narrow band, opening at N1,376 per dollar and closing at N1,387, reflecting a modest 0.79 percent depreciation.

According to the firm, the slight weakening was driven by external debt servicing obligations and continued CBN interventions to manage liquidity and stabilise the currency. FX demand for imports and other obligations remained elevated but was partly offset by official dollar sales.

The report added that global factors, including oil price movements and demand for invisible transactions, also weighed on the currency, although the CBN’s active market participation helped limit volatility.

Looking ahead, analysts at Comercio Partners expect the naira to face mild to moderate depreciation pressures in April, with the market likely to remain in a consolidation phase under the current willing-buyer, willing-seller framework.

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They also flagged risks from potential oil price volatility and sustained import demand, while noting that a recent policy allowing international oil companies to fully repatriate export proceeds could drive short-term FX outflows and add pressure on reserves.

Nonetheless, the firm expects external reserves to stabilise or recover slightly, supported by relatively strong crude oil prices, although production challenges may continue to constrain Nigeria’s foreign exchange earnings.