Naira sees big gain against dollar after CBN announces new interest rate

• The Central Bank of Nigeria (CBN) kept the Monetary Policy Rate astatine 27.5%, starring to a 0.5% appreciation of the naira against the US dollar
• Foreign speech inflows roseate importantly to $914 cardinal past week, boosting marketplace enactment and expanding Nigeria’s gross overseas reserves to $38.34 billion
• CBN Governor Olayemi Cardoso highlighted reduced currency volatility and improved macroeconomic stableness arsenic signs of increasing assurance successful the Nigerian economy

Legit.ng writer Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

As the Central Bank of Nigeria (CBN) decided to support the Monetary Policy Rate (MPR) astatine 27.5%, the worth of the naira accrued by 0.5% against the US dollar.

Cardoso credited naira's comparative stableness to timely reforms and stronger buffers. Photo Credit: Contributor
Source: Getty Images

According to BusinessDay reports, information from the Nigerian Foreign Exchange Market (NFEM) connected Tuesday indicated that the section currency closed astatine N1,590.45 per dollar, representing a summation of N8.23 implicit the complaint of N1,598.68 the erstwhile day.

Street merchants quoted the dollar astatine N1,620, and the naira traded steadily successful the parallel marketplace contempt the summation successful the authoritative window.

One trader remarked, “There hasn’t been overmuch question connected the thoroughfare rate, but there’s increasing optimism with what the cardinal slope is doing.”

As overseas speech inflows accrued importantly to $914 cardinal past week from $619 cardinal the week before, marketplace enactment astatine the NFEM demonstrated beardown momentum. The probe section astatine Coronation Merchant Bank reported that this amounts to a 47.66% play rise.

More Analysis

According to a thorough investigation of the sources of inflows, overseas portfolio investors made up 12.53 per cent of the total, while the CBN provided 25.41 per cent. Exporters contributed 20.79 per cent, non-bank corporates contributed 28.85 per cent, and the remaining 12.42 per cent came from different sources.

In summation to amended inflows, Nigeria's gross overseas reserves increased by 0.55% implicit the people of the week, ending astatine $38.34 cardinal arsenic of 16 May 2025. Additionally, the naira saw a flimsy summation of 0.02 per cent against the Chinese yuan, finishing astatine N221.77 to 1 yuan.

Following the two-day gathering of the Monetary Policy Committee, CBN Governor Olayemi Cardoso assured reporters connected Tuesday that each important monetary parameters remained unchanged.

He clarified that the necessity to support macroeconomic stableness guided the decision, emphasising that caller changes person begun to nutrient favourable results.

According to him, “Volatility successful the overseas speech marketplace has declined significantly, falling beneath 0.5 per cent arsenic our monetary and fiscal reforms statesman to stabilise the macroeconomic environment.”

The naira had lone somewhat depreciated passim caller planetary economical difficulties, and Cardoso credited its comparative stableness to timely reforms and stronger buffers, pointing to the alteration successful currency complaint volatility arsenic an denotation of accrued assurance successful the Nigerian economy.

“If you look astatine the speech rate, volatility has reduced from implicit 4 per cent a twelvemonth agone to little than fractional of 1 per cent now. That’s an denotation of stability,” helium said.

Data from the Nigerian Foreign Exchange Market (NFEM) connected Tuesday indicated that the section currency closed astatine N1,590.45 per dollar. Photo Credit: Contributor
Source: Getty Images

He besides emphasised that the state present has “a comparatively much competitory currency.” In the erstwhile week, the naira had gained 0.46 per cent against the US dollar successful the authoritative spot market, closing astatine N1,598.72 per dollar aft 3 weeks of accordant losses.

“Forward marketplace rates besides showed movement, with the one-month guardant closing astatine N1,636.05, the three-month declaration astatine N1,700.59, the six-month declaration astatine N1,793.67, and the one-year guardant complaint astatine N1,972.22 per dollar. However, successful the parallel market, the naira slipped slightly, losing 0.12 per cent to adjacent astatine N1,627 per dollar connected Friday,” the study indicated.

Elumelu speaks connected expectations for naira

Legit.ng reported that Nigerian concern mogul Tony Elumelu has revealed that the newfound stability of the naira is simply a large boost for investors and concern owners successful Nigeria.

Speaking astatine the Qatar Economic Forum connected Tuesday, May 20, the president of United Bank for Africa (UBA) expressed optimism astir the naira's caller performance.

Elumelu, who is besides the biggest shareholder of Transnational Corp. of Nigeria Plc, spoke connected the value of a unchangeable currency.

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Source: Legit.ng