Naira Holds Ground Against US Dollar as CBN Announces Interest Rate
- Nigeria's naira shows resilience, closing at N1,373.34 per dollar amid economic reforms and steady interest rates
- Central Bank retains benchmark interest rate at 26.5% despite rising inflation, focusing on stability in uncertain times
- External reserves increase to $49.49 billion, boosting investor confidence and supporting ongoing foreign exchange reforms
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria’s currency showed renewed resilience on Wednesday as the naira held firm against the US dollar at the official foreign exchange market, following the decision of the Central Bank of Nigeria (CBN) to retain its benchmark interest rate at 26.5 per cent.
The development comes amid growing investor optimism over the country’s improving foreign reserves, ongoing economic reforms, and efforts by the apex bank to maintain exchange rate stability despite global economic uncertainty.
Source: Getty Images
Naira records marginal gain at official market
Data released by the CBN showed that the naira appreciated slightly by 53 kobo at the Nigerian Foreign Exchange Market (NFEM), closing at N1,373.34 per dollar on Wednesday compared to N1,373.87 recorded on Tuesday.
Although trading activity weakened during the session, analysts said the stability of the local currency reflects increasing confidence in the monetary authority’s reform agenda.
Turnover at the NFEM window dropped by 18.65 per cent to $286.03 million from $351.60 million posted the previous day. However, the number of completed deals remained unchanged at 261 transactions.
In the interbank market, trading activity improved significantly as the number of deals rose from 76 to 112 transactions. Despite the increase in activity, total turnover dipped slightly to $68.02 million from $72.42 million.
At the parallel market, popularly known as the black market, the naira weakened marginally by N5 to close at N1,395 per dollar, widening the gap between the official and unofficial exchange rates to N22.
CBN retains interest rate amid global uncertainty
At the end of its two-day Monetary Policy Committee (MPC) meeting, the CBN retained all key monetary policy parameters unchanged in a move widely anticipated by investors and financial analysts.
The Monetary Policy Rate (MPR) was maintained at 26.5 per cent, while the asymmetric corridor around the rate stayed at +50/-450 basis points.
The Cash Reserve Ratio (CRR) for Deposit Money Banks remained at 45 per cent, while Merchant Banks retained a CRR of 16 per cent. The liquidity ratio was also left unchanged at 75 per cent.
Speaking after the meeting, Olayemi Cardoso said the decision was based on a careful assessment of both domestic and global economic risks, including geopolitical tensions in the Middle East that continue to pressure global energy prices and supply chains.
Despite inflation rising for the second consecutive month, Cardoso said the MPC believes current inflationary pressures are temporary and that disinflation is expected to resume in the coming months.
External reserves rise above $49 billion
One of the strongest signals supporting investor confidence was the rise in Nigeria’s external reserves.
According to Cardoso, gross external reserves climbed to $49.49 billion as of May 15, 2026, up from $48.35 billion at the end of March.
He noted that the reserve position now provides more than nine months of import cover, strengthening Nigeria’s ability to withstand external economic shocks and supporting ongoing foreign exchange reforms.
“Available evidence indicates that the impact of the crisis on the Nigerian economy has been largely muted due to the benefits of prior policy reforms,” Cardoso stated.
Analysts react to CBN decision
Economists said the MPC’s decision aligns with expectations as major global central banks, including the US Federal Reserve and the Bank of England, continue to maintain relatively tight monetary conditions.
Razia Khan described the decision as unsurprising, noting that policymakers are betting on inflation easing over time.
However, she warned that inflation risks remain elevated, especially with potential fiscal pressures ahead of Nigeria’s election cycle.
Similarly, Bismarck Rewane said Nigeria’s macroeconomic position has improved considerably due to stronger reserves, better oil prices, and ongoing reforms.
He added that the country is now in a better position to maintain a “stable, predictable and well-managed exchange rate.”
Reform efforts strengthen confidence
The MPC also praised recent economic reforms, including exchange rate stabilisation measures, banking sector recapitalisation, and fiscal consolidation efforts.
According to the committee, these reforms have significantly improved Nigeria’s ability to absorb external shocks and reduced the impact of rising global commodity prices on domestic inflation.
Source: Getty Images
The committee further welcomed Nigeria’s recent sovereign rating upgrade by S&P Global Ratings, describing it as evidence of strengthening macroeconomic fundamentals and growing policy credibility.
Analysts believe the latest policy decisions are aimed at preserving investor confidence, attracting foreign inflows, and sustaining stability in the foreign exchange market amid persistent global headwinds.
CBN, banks update naira exchange rates
Legit.ng earlier reported that the naira has weakened slightly against the United States dollar, while other currencies remain relatively steady at both official and unofficial markets.
Latest data from the CBN showed that the naira weakened slightly against the United States Dollar on Tuesday, May 19, in the official Nigerian Foreign Exchange Market (NAFEM).
The local currency depreciated by 17 Kobo or 0.01% to close at N1,373.87/$1, compared with N1,373.70/$1 recorded in the previous trading session.
Source: Legit.ng
