The naira appreciated by 0.5 per cent against the United States dollar after the decision by the Central Bank of Nigeria (CBN) to retain the Monetary Policy Rate (MPR) at 27.5 per cent.
Data from the Nigerian Foreign Exchange Market (NFEM) on Tuesday showed that the local currency closed at N1,590.45 per dollar, reflecting a gain of N8.23 compared to the previous day’s rate of N1,598.68, according to BUSINESSDay reports.
Despite the gain in the official window, the naira traded steadily at the parallel market, with street traders quoting the dollar at N1,620. One trader remarked, “There hasn’t been much movement on the street rate, but there’s growing optimism with what the central bank is doing.”
Market activity at the NFEM reflected strong momentum as foreign exchange inflows rose sharply to $914 million last week, up from $619 million the week before. This represents a week-on-week increase of 47.66 per cent, according to a report by Coronation Merchant Bank’s research department.
A detailed breakdown of the sources of inflows revealed that the CBN contributed 25.41 percent of the total, while Foreign Portfolio Investors accounted for 12.53 percent. Non-bank corporates were responsible for 28.85 per cent, exporters brought in 20.79 percent, and other sources made up the remaining 12.42 per cent.
In addition to the improved inflows, Nigeria’s gross foreign reserves rose by 0.55 percent within the week, closing at $38.34 billion as of May 16, 2025. The naira also posted a marginal gain of 0.02 percent against the Chinese Yuan, closing at N221.77 to one Yuan.
Governor of the CBN, Olayemi Cardoso, while addressing journalists on Tuesday after the Monetary Policy Committee’s two-day meeting, confirmed that all key monetary parameters were left unchanged.
He explained that the decision was informed by the need to sustain macroeconomic stability, highlighting that recent reforms have started yielding positive outcomes. According to him, “Volatility in the foreign exchange market has declined significantly, falling below 0.5 percent as our monetary and fiscal reforms begin to stabilise the macroeconomic environment.”
Cardoso pointed to the reduction in exchange rate volatility as a sign of growing confidence in the Nigerian economy. He noted that the naira had witnessed only modest depreciation during recent global economic tensions and attributed its relative stability to timely reforms and improved buffers. “If you look at the exchange rate, volatility has reduced from over 4 per cent a year ago to less than half of 1 percent now. That’s an indication of stability,” he said.
He also emphasised that the country now has “a relatively more competitive currency.”In the previous week, the naira had gained 0.46 percent against the US dollar in the official spot market, closing at N1,598.72 per dollar after three weeks of consistent losses. Forward market rates also showed movement, with the one-month forward closing at N1,636.05, the three-month contract at N1,700.59, the six-month contract at N1,793.67, and the one-year forward rate at N1,972.22 per dollar. However, in the parallel market, the naira slipped slightly, losing 0.12 percent to close at N1,627 per dollar on Friday, the report indicated.
