The naira appreciated against the US dollar across foreign exchange markets on Tuesday, following the Central Bank of Nigeria’s (CBN) decision to cut interest rates for the first time in five years.

Data from the CBN showed that the local currency closed at ₦1,487.37/$1 at the official window, stronger than ₦1,488.60/$1 recorded on Monday — a day-to-day gain of ₦1.23.

At the parallel market, the naira also appreciated by ₦2, trading at ₦1,520/$1 on Tuesday compared to ₦1,522/$1 the previous day.

The gains came after the Monetary Policy Committee (MPC) reduced the Monetary Policy Rate (MPR) by 50 basis points to 27%, down from 27.5%. It marked the first interest rate cut since 2020.

CBN Governor Olayemi Cardoso said the decision reflected improved macroeconomic stability, citing months of disinflation, steady output growth, a stable exchange rate, and rising external reserves.

“The MPC expressed satisfaction with the prevailing macroeconomic stability evidenced by the improvements in several indicators. These include sustained disinflation, improved output growth, stable exchange rate, and robust external reserves,” Cardoso stated.

The latest appreciation follows a continued rise in Nigeria’s external reserves, which stood at $42.13 billion on September 22, 2025, up from $42.03 billion the previous day.

Analysts suggest the combination of stronger reserves and lower interest rates could ease liquidity pressures in the FX market, offering further support to the naira.