The Nigerian naira maintained relative stability across foreign exchange markets this week following the Central Bank of Nigeria's (CBN) reset of its benchmark interest rate, supported by strengthening external reserves and controlled market activity. On Friday, the naira appreciated marginally by N1.69 week-on-week, with the dollar trading at N1,329.51 compared to N1,331.20 the previous week, according to data from the Nigerian Foreign Exchange Market (NFEM).
Despite a slight 84-kobo decline from Thursday's N1,328.67, the currency strengthened by 29 kobo over the five trading days, closing at N1,329.80 on Monday. In the parallel market, the naira remained stable at N1,385 per dollar, narrowing the gap with the official rate to N56 (4.21%) from N57 (4.29%) the prior day.
Market activity saw reduced turnover, with the interbank segment recording $711.79 million on Friday—a decline from the $2.74 billion cumulative total in the previous week. For the current week's four trading days, total turnover stood at $2.25 billion, compared to $2.74 billion in the prior week's five days. The number of deals also dropped, from 1,498 in the previous week to 1,351 this week.
Nigeria's external reserves continued their upward trend, reaching an 18-year high of $54.86 billion as of September 24, 2026, a 30% increase from $42.29 billion in the same period in 2025. Governor Olayemi Cardoso noted that reserves had reached $55.25 billion as of September 18, sufficient to cover 11.3 months of imports. This resilience provides the CBN with tools to stabilize the currency and meet external obligations.
At its recent Monetary Policy Committee (MPC) meeting, the CBN reset the Monetary Policy Rate (MPR) to 23% and adjusted the Standing Facilities Corridor to +50/-300 basis points around the MPR. The Cash Reserve Requirement (CRR) for Deposit Money Banks was maintained at 45%, while Merchant Banks and non-TSA public sector deposits retained rates of 16% and 75%, respectively.
Analysts highlighted potential risks from the rate cut, including impacts on portfolio flows and foreign exchange stability. Muda Yusuf of the Centre for the Promotion of Private Enterprise (CPPE) warned that divergent monetary policies between Nigeria and major central banks could reduce the attractiveness of naira-denominated assets, increasing the risk of capital outflows. However, the CPPE acknowledged stronger external buffers compared to past easing cycles, citing improved reserves and market stability.
The CBN's policy adjustments come amid broader economic challenges, including inflationary pressures and global market volatility. While the rate cut aims to stimulate growth, the central bank must balance this with maintaining currency stability. The interplay between domestic monetary policy and external factors will remain critical in shaping Nigeria's economic trajectory in the coming months.
The article was originally published by BusinessDay Nigeria.
The reporting was authored by Hope Moses-Ashike, an Associate Editor, Banking and Finance, with over a decade of experience covering Nigeria's financial system and broader economy.