Naira Firms to N1,375/$ as CBN Holds Rates, Reserves Hit $49bn

The naira strengthened slightly on Tuesday, trading at N1,375 per US dollar in the foreign exchange market. Analysts say the market is stable, supported by a mix of government policies and trading activity.

The exchange rate has moved within a narrow range, signalling reduced pressure on the local currency. Traders are watching the N1,350/$ level closely. That mark is seen as a key psychological point for the market.

CBN keeps rates unchanged

A major reason for the naira’s recent performance is the Central Bank of Nigeria’s decision to maintain tight monetary policy. At its 305th Monetary Policy Committee meeting, the CBN held the Monetary Policy Rate at 26.5%. Inflation had eased earlier in the year but rose again in April to 15.69%. Higher global energy costs and supply chain disruptions linked to tensions in the Middle East drove the increase. The CBN opted not to cut rates.

Strong reserves back the naira

Nigeria’s external reserves remain robust at about $49 billion. That amount covers nearly nine months of imports. It gives the CBN room to support the naira and reduce sharp exchange rate swings. The Cash Reserve Ratio stays high at 45%. Banks must keep a large share of their funds with the CBN. This cuts excess naira in circulation and limits speculation against the dollar.

Global factors in play

The US Dollar Index rose slightly to 99.1. Demand for the dollar increased as investors moved into safer assets. Uncertainty over possible peace talks between the United States and Iran drove the shift. Reports of military tensions and ongoing negotiations around the Strait of Hormuz have kept markets cautious.

Oil prices have dropped in recent days. Traders expect lower geopolitical risks. Brent crude fell below $100 per barrel, easing global inflation fears.

Overall, analysts say the naira is benefiting from tighter monetary policy, stronger reserves, and improving market confidence. But global developments remain a key factor to watch.