Naira Bounces Back in Black Market After CBN Cuts Interest Rate
- The naira gained N10 in the black market to N1,390 after the CBN cut its benchmark interest rate by 50 basis points
- Despite the parallel market rebound, the naira weakened in the official FX window, closing at N1,355.37 per dollar
- Analysts have provided insight into the latest developments in the monetary policy market
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Legit.ng journalist Dave Ibemere has experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends
The naira rebounded in the parallel foreign exchange market on Wednesday, February 25, after the Central Bank of Nigeria (CBN) lowered its benchmark interest rate by 50 basis points.
Data from currency dealers showed the Nigerian currency strengthened by N10 against the dollar, with the greenback quoted at N1,390 in the black market, up from N1,400 on Tuesday, a 0.7% gain.
Source: Getty Images
The official exchange rate, however, continued to weaken, closing at N1,355.37 per dollar on Tuesday, down N6.13 or 0.5% from Monday’s N1,349.24 at the Nigerian Foreign Exchange Market window, BusinessDay reports.
Meanwhile, the CBN Governor Olayemi Cardoso said the Monetary Policy Committee’s decision to reduce the Monetary Policy Rate to 26.5% followed nearly a year of easing inflation, stronger foreign exchange reserves, and improving macroeconomic conditions, creating space for cautious policy relaxation.
Expert reacts to MPC rate cut
Analysts said the rate cut could bolster investor confidence if foreign exchange liquidity remains stable. Lukman Otunuga, senior market analyst at FXTM, said the move “is likely to have a stabilising and potentially positive impact on the naira,” which has gained about 6% year-to-date. He noted that Nigeria’s interest rates remain among the highest in Africa, continuing to attract foreign investors.
Muda Yusuf, the CEO Centre for the Promotion of Private Enterprise (CPPE) told Legit.ng that the policy direction is appropriate and growth-supportive. It reflects improving macroeconomic fundamentals and reinforces confidence in the economy’s stabilisation trajectory.
"The CPPE welcomes the Central Bank of Nigeria’s cautious, data-informed policy adjustment. The rate cut reflects improvements in key macroeconomic indicators, including lower inflation, rising foreign reserves, a healthier trade balance, and greater foreign exchange stability.
"For the full benefits of monetary easing to materialize, two priorities need attention: strengthening the transmission of monetary policy to ensure that lower rates reach the real sector, and implementing credible fiscal consolidation measures to maintain macroeconomic stability.
"With supportive structural reforms and disciplined fiscal management, the current policy stance could stimulate a stronger investment cycle and foster sustainable economic growth."
Source: Getty Images
Also, Adebowale Funmi, head of research at Parthian Securities, cautioned that global oil market volatility remains a risk. “Lower oil prices could widen Nigeria’s fiscal deficit and increase government borrowing needs, suggesting that interest rates may still need to remain attractive to investors,” she said.
Nigeria’s external reserves rise to highest level in 8 years
Earlier, Legit.ng reported that Nigeria’s foreign exchange reserves have climbed to their highest level in eight years, offering renewed optimism for the naira and strengthening the country’s external buffers amid ongoing economic reforms.
Data from the CBN shows that gross external reserves rose to $46.012 billion as of January 22, 2026, marking an increase of about $510 million since the start of the year.
Source: Legit.ng
