Naira gains on USD, trades at ₦1,484/$ as inflation eases
Story by Martha Gwary
The naira strengthened further against the United States dollar on Tuesday, ahead of a key interest rate decision by the US Federal Reserve later in the day.
At the official foreign exchange (FX) market, the dollar fell to ₦1,484.13, improving from Monday’s closing rate of ₦1,497.5/$, a gain of ₦13.
In the parallel (black) market in Lagos, Nigeria’s financial hub, the naira traded between ₦1,520/$ and ₦1,530/$ in mid-week transactions.
READ ALSO: Naira Strengthens: Hits 5-month peak as FX market shows signs of stability
Analysts noted that subdued demand for foreign exchange, partly due to Nigerian banks’ restrictions on naira debit cards for FX purchases, has helped stabilise the currency below the ₦1,500/$ mark. This trend signals a phase of relative calm for the naira, nearly a year after its steep decline.
Market watchers suggest that naira gains could continue in the medium term, supported by moderating inflationary pressures.
Nigeria’s inflation rate has now slowed for the fifth straight month, offering some respite to households burdened by high living costs. Data from the National Bureau of Statistics (NBS) showed inflation fell to 20.12% in August, down from 21.88% in July.
READ ALSO: Nigeria’s reserves poised for growth, aiding Naira stability
The Consumer Price Index (CPI), which measures average price changes, rose slightly from 125.9 points in July to 126.8 points in August. Month-on-month inflation dropped sharply to 0.74%, compared to 1.99% in July, reflecting a slowdown in nationwide price increases.
Food inflation, the main driver of rising prices in Nigeria, also eased in August though it remains elevated. The index slipped to 21.87% year-on-year, from 37.52% in August 2024.
On a monthly basis, food inflation dropped to 1.65% in August, down from 3.12% in July.
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