March 16, 2026/CSL Update
The Central Bank of Nigeria (CBN) has indicated that it has prepared contingency measures to stabilise the Naira should the currency come under pressure from global market volatility triggered by tensions in the Middle East. According to a Bloomberg report, Deputy Governor Muhammad Sani Abdullahi disclosed that the apex bank is ready to intervene in the foreign exchange (FX) market to smooth excessive fluctuations.
We highlight that following the US-Israel attack on Iran on 28 February, the Naira weakened in the official market from around ₦1,363/US$ to as high as ₦1,405/US$, reflecting heightened global risk sentiment. However, the local currency has since recovered modestly to about ₦1,366/US$. We believe that the recent improvement in the local currency can be partly attributed to increased interventions by the apex bank in the FX market.
Notably, prior to the escalation of tensions in the Middle East, net inflows into the FX market from the CBN were negative (see figure 1). However, since the tensions intensified, the apex bank has significantly increased its interventions, selling approximately US$695.6 million between 27 February and 6 March to help stabilise the local currency. In our view, without these interventions, the Naira could have weakened beyond the levels observed, potentially undermining investor confidence.
As highlighted in our latest report (see CSL Economics and Strategy Report: “Rising crude prices on US-Iran tensions provide short-term upside for Nigeria”, 03 March), authorities retain adequate foreign currency buffers to support such
market interventions, with net external reserves recently estimated at around US$34.8 billion. In addition, with crude oil prices trading above the US$100 per barrel mark, higher export earnings could translate into stronger accretion to external reserves.
That said, if tensions in the Middle East persist for longer than anticipated and global risk-off sentiment intensifies, the Naira could come under renewed depreciation pressure despite ongoing policy support (the Naira has appreciated over the past four trading days). In a scenario of heightened global risk aversion, the CBN may need to carefully balance continued market intervention with tight monetary policy and effective liquidity management to support the currency while safeguarding broader macroeconomic stability.
Click here to download full report: CSL Nigeria Daily – 16 March 2026 – Economy.pdf
