The naira strengthened in both the parallel and official foreign-exchange markets despite the Central Bank of Nigeria’s decision to cut the Monetary Policy Rate by 350 basis points to 23 per cent, as improved dollar liquidity and stronger external reserves continued to provide support for the currency.
In the parallel market, popularly known as the black market, the naira appreciated by ₦5 on Wednesday, September 23, trading at about ₦1,385 to the dollar, compared with ₦1,390 previously.
The movement came a day after the naira also recorded a marginal gain at the Nigerian Foreign Exchange Market (NFEM), where the official exchange rate closed at ₦1,327.78/$ on Tuesday, appreciating by ₦2.02, or 0.15 per cent, from ₦1,329.80/$ recorded on Monday, according to Central Bank of Nigeria data.
The difference between the official and parallel-market rates consequently narrowed to about ₦58, representing approximately 4.37 per cent, compared with a gap of ₦61, or 4.59 per cent, on Monday.
The gains came despite the CBN’s substantial reduction of its benchmark interest rate, a move that ordinarily could reduce the attractiveness of naira-denominated assets to foreign portfolio investors if returns decline relative to other markets.
Foreign-exchange liquidity, however, improved significantly.
Total turnover at the NFEM window rose by 107.02 per cent to $694.58 million on Tuesday, more than double the $335.51 million recorded on Monday.
The number of transactions also increased from 290 to 367, representing a rise of 26.55 per cent.
At the interbank segment, the number of deals increased by 27.45 per cent, from 102 on Monday to 130 on Tuesday. Turnover at that segment, however, declined by 14.81 per cent to $99.17 million, compared with $116.41 million a day earlier.
The currency’s performance is also occurring against the backdrop of a substantial improvement in Nigeria’s external reserves.
According to CBN figures cited in the report, gross external reserves stood at $54.79 billion as of September 21, 2026, representing a 30.36 per cent increase from $42.03 billion recorded on September 19, 2025.
CBN Governor Olayemi Cardoso had also disclosed at the conclusion of the Monetary Policy Committee meeting that gross reserves stood at $55.25 billion on September 18, which he described as the highest level in 18 years.
According to Cardoso, that reserve position was sufficient to finance approximately 11.3 months of imports of goods and services, giving the CBN a stronger external buffer to meet international obligations and respond to pressure in the foreign-exchange market.
The currency movements followed Tuesday’s conclusion of the MPC meeting in Abuja, where the Committee reduced the Monetary Policy Rate by 350 basis points to 23 per cent.
The MPC also recalibrated the Standing Facilities Corridor to +50/-300 basis points around the MPR while retaining the Cash Reserve Requirement at 45 per cent for Deposit Money Banks, 16 per cent for merchant banks and 75 per cent for non-Treasury Single Account public-sector deposits.
The interest-rate reduction represents a significant shift in monetary policy and is expected to reduce borrowing costs over time if transmitted through the banking system.
Analysts, however, have warned that the sharp easing could present risks for portfolio investment and the foreign-exchange market.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said the difference between Nigeria’s monetary-policy direction and policy decisions by some major central banks could affect interest-rate differentials and the relative attractiveness of naira-denominated financial assets.
According to him, a reduction in those differentials could create a risk of portfolio-flow reversals and renewed pressure on the naira.
The CPPE nevertheless noted that Nigeria was entering the latest monetary-easing cycle from a stronger external position than in previous periods, pointing to the significant accumulation of foreign reserves and greater stability in the foreign-exchange market.
