The Nigerian Naira showed renewed strength in foreign exchange trading on Tuesday, climbing to N1,441 against the US dollar. This positive movement came immediately after the Central Bank of Nigeria concluded its 303rd Monetary Policy Committee meeting in Abuja.
Monetary Policy Committee Holds Firm
The Central Bank's Monetary Policy Committee voted to maintain all key economic indicators during their two-day gathering. The Monetary Policy Rate remains at 27 percent, marking the highest level in recent history as the apex bank continues its aggressive approach to tackling inflation and stabilizing the currency.
According to updated figures from the CBN's official website, the Naira's improvement from Monday's rate of N1,452 per dollar reflects growing market confidence in the bank's policy direction. The sustained monetary tightening strategy appears to be yielding positive results in the foreign exchange market.
Policy Parameters Remain Unchanged
The committee maintained several crucial banking sector ratios as part of its comprehensive economic stabilization plan. The Cash Reserve Ratio stays at 45.00% for Deposit Money Banks and 16.00% for Merchant Banks, while the Liquidity Ratio remains at 30.0%.
Notably, the MPC adjusted the Asymmetric Corridor to +50/-450 basis points around the MPR. This technical adjustment aims to strengthen the central bank's control over short-term interest rate fluctuations and enhance monetary policy effectiveness.
Economic Outlook and Projections
CBN Governor Olayemi Cardoso emphasized that maintaining the restrictive monetary stance is essential for consolidating recent gains in the foreign exchange market. He explained that the current policy environment is specifically designed to attract foreign capital inflows, improve market transparency, and support the federal government's broader economic reform agenda.
Financial institutions are showing increased optimism about the Naira's prospects. The Standard Bank has projected that the Nigerian currency will close at N1,458.8 per dollar by December 2025. This improved forecast reflects growing confidence in the country's foreign exchange reserves, banking system liquidity, and investor appetite for Naira-denominated assets.
The bank revised its September projection downward from N1,585.5 per dollar, acknowledging the CBN's successful efforts in stabilizing the currency market. However, analysts caution that political developments and increased fiscal spending ahead of the 2027 general elections could potentially exert renewed pressure on the Naira.
President Bola Tinubu, during his December 2024 budget presentation, outlined government expectations for significant economic improvements in 2025. The administration projects inflation will decline from the current 34.6 percent to 15 percent, while the exchange rate is expected to strengthen from approximately N1,700 to N1,500 per US dollar.
