The Central Bank of Nigeria cut its interest rate by 50 basis points to 27% from 27.5% in July, marking the first rate reduction in five years.
This move is part of the CBN’s efforts to stimulate economic growth as inflation shows consistent signs of easing. The naira appreciated to ₦1,487.36 per dollar in the official foreign exchange market, representing a marginal gain of 0.08% from ₦1,488.60 on Monday.
The CBN’s cautious decision to reduce its benchmark interest rate is expected to boost economic growth while keeping the naira attractive to foreign portfolio investors. According to CBN Governor Olayemi Cardoso, the decision was taken to boost economic growth and sustain foreign portfolio investments into the country.
Oil prices rose for a second day, with Brent futures increasing by 19 cents, or 0.3%, to $67.82 a barrel. The benchmark climbed more than $1 a barrel on Tuesday due to a deal stall in resuming exports from Iraq’s Kurdistan, halting pipeline shipments of oil from the region to Turkey.
The naira held steady at ₦1,515 per dollar in the parallel market. In the official market, the naira gained ₦1.23 against the dollar, trading at ₦1,487.37 per dollar. FX inflows into the NAFEM window rose to $605 million, with Foreign Portfolio Investments accounting for 41.6% of the total inflows.
Nigeria’s daily crude oil production rose to 1.68 million barrels per day in the second quarter of 2025, a four year quarter high since 2022. The country’s gross external reserves recorded a marginal increase of 0.72% to $42.00 billion, providing the apex bank with firepower to defend the naira.
Coronation Merchant Bank noted that the naira is expected to trade within a relatively stable band in the coming week, with potential for mild appreciation if foreign portfolio inflows and liquidity support remain sustained. The CBN’s decision to cut interest rates is seen as a cautious step towards stimulating growth without abandoning its inflation fighting credentials.
Total FX inflows into the NAFEM window rose to $605.00 million, compared to $550.90 million the previous week. Foreign Portfolio Investments accounted for the largest share of inflows at $251.70 million, representing 41.60%. Exporters contributed 19.72%, non bank corporates 13.33%, Foreign Direct Investments 8.94%, the CBN 6.10%, while other sources accounted for 10.32%.
