The naira extended its recent recovery on Tuesday, strengthening by 0.5 per cent in the official Nigerian Foreign Exchange Market (NFEM) just hours after the Central Bank of Nigeria (CBN) left its benchmark interest rate unchanged at a punishing 27 per cent.
Official data released by the CBN showed the dollar closed at N1,446.31, an improvement of N7.53 from Monday’s N1,453.84. In the parallel market, the naira held steady at N1,460 per dollar, narrowing the gap between the two segments to its lowest in weeks.
The gains reversed part of last week’s losses, when the currency had weakened by roughly 1 per cent in both windows amid thinner dollar liquidity.
Analysts said the CBN’s decision to keep borrowing costs elevated continues to make naira assets attractive to yield-hungry foreign investors, helping to pull dollars back into the official market despite a sharp week-on-week drop in total FX inflows.
According to Coronation Merchant Bank, turnover at the NFEM fell to $512.2 million last week from $672.3 million the previous week. Foreign portfolio investors remained the largest suppliers, bringing in $198.6 million (38.8 per cent of the total), followed by exporters.
A brighter spot was Nigeria’s external reserves, which climbed by $549 million—or 1.3 per cent—to $44.19 billion as of November 20, the highest level in months, thanks to sustained CBN dollar sales and limited hard-currency outflows.
Ayodele Omotoso, currency strategist at Coronation Merchant Bank, said: “The combination of sky-high domestic yields and a central bank that is still willing to supply dollars when needed is keeping the naira relatively anchored. We see the official rate staying comfortably below N1,500 through year-end barring any major external shock.”
Tuesday’s appreciation came on the same day Governor Olayemi Cardoso announced the Monetary Policy Committee had voted unanimously to hold the Monetary Policy Rate at 27 per cent for the second straight meeting, citing the need to lock in recent inflation gains.
Market participants now expect the naira to trade within a tight N1,440–N1,470 band in the near term, supported by attractive carry-trade returns and steadily rebuilding reserves.
