See Exchange Rate As Naira Appreciates In Parallel Market

Naira appreciated against the United States dollar in both the official and parallel foreign exchange markets on Tuesday following the decision of the Central Bank of Nigeria, CBN, to cut its interest rate for the first time in five years.

The apex bank reduced the rate by 50 basis points to 27 percent, a move that immediately had a positive effect on the money market.

Data released by the CBN showed that the Naira closed stronger at ₦1,487.37 per dollar compared to ₦1,488.60 recorded on Monday.

This indicates that the Nigerian currency gained ₦1.23 within a single trading day, reflecting improved confidence in the economy.

The appreciation was also felt in the black market, where the Naira firmed up by ₦2, trading at ₦1,520 per dollar on Tuesday, an improvement from ₦1,522 the previous day.

This development came after the local currency had recorded a slight decline at the start of the week, raising concerns among traders and investors.

The quick rebound has been attributed largely to the CBN’s interest rate cut, which analysts describe as a timely intervention aimed at stimulating growth while consolidating gains made in stabilising the foreign exchange market.

Speaking on the decision, the Governor of the Central Bank, Olayemi Cardoso, said the Monetary Policy Committee carefully reviewed prevailing conditions in the economy before opting for the reduction.

He explained that the move was backed by several positive indicators that pointed to stability.

According to him, the MPC expressed satisfaction with the improvements recorded in disinflation, output growth, exchange rate stability, and external reserves.

He added that the committee believed the time was right to ease rates to encourage further economic activities and enhance liquidity across the markets.

The CBN’s move has also coincided with a steady rise in Nigeria’s foreign reserves, which climbed to $42.13 billion as of September 22, up from $42.03 billion just a day earlier.

The increase in reserves has been seen as a source of confidence for both local and foreign investors, suggesting that the country is in a stronger position to meet external obligations and defend the Naira against undue pressure.

Economic observers note that the combination of a stronger reserve base and a more flexible interest rate policy could support stability in the medium term, provided that other structural issues within the economy are addressed.

Market watchers believe that the latest developments send a clear signal of cautious optimism.

While the Naira’s gains may appear modest on the surface, the symbolic importance of the CBN’s action and the resulting market response indicate that Nigeria’s monetary authorities are prepared to support growth while safeguarding stability.

Traders, businesses, and households alike will be watching closely in the coming days to see if the positive momentum continues and whether the Naira can sustain its strength in the face of domestic and global economic pressures.