The Nigerian naira extended its gains against the U.S. dollar on Tuesday ahead of a key interest rate decision by the United States Federal Reserve.
At the official foreign exchange market, the dollar fell to ₦1,484.13/$, compared with ₦1,497.50/$ quoted on Monday. However, in the parallel market, the naira traded within the ₦1,520–₦1,530/$ band at mid-week.
Analysts say reduced FX demand, partly due to limits on Nigerian banks’ debit card transactions abroad, has supported the naira’s stability, keeping it below the ₦1,500/$ threshold. The currency has held steady after sharp declines last year.
The gains come as Nigeria’s inflation rate slowed for the fifth consecutive month, offering relief to households grappling with high living costs.
Data from the National Bureau of Statistics (NBS) showed headline inflation eased to 20.12% in August 2025, down from 21.88% in July. Month-on-month inflation also dropped sharply to 0.74% from 1.99% in the previous month.
Food inflation, the main driver of price pressures, moderated to 21.87% year-on-year from 37.52% in August 2024, while the monthly rate fell to 1.65% from 3.12% in July.
Analysts believe the softer inflation readings could provide further momentum for the naira in the mid-term.