The Nigerian currency maintained upside against the American dollar as the United States Central Bank makes an important interest decision later today.
The U.S dollar plummeted to N1,484.13 on Tuesday in the Nigerian official foreign exchange (FX) market, which was N13 higher than the N1,497.5/$ quoted on Monday.
However, the naira traded at the N1520/$-N1530/$ band at the physical black market in Nigeria’s business capital at the mid-week trading session.
Nigerian Banks’ naira debit card dealing with FX transactions had also led to a drop in FX demand, providing Naira bulls with enough ammunition to hold below the N1,500/$ support line. The naira is experiencing a period of stability, one year after a precipitous decline against the dollar.
Naira bulls might gain some momentum in the mid-term amid projected moderation in Nigeria’s inflation readings.
Nigeria’s inflation rate decreased for the fifth consecutive month, providing respite to consumers burdened by consistently high living expenses.
NBS data revealed that Nigeria’s inflation rate dropped to 20.12% in August.
The average change in prices of goods and services is measured by the Consumer Price Index (CPI), which rose slightly from 125.9 points in July to 126.8 points in August.
According to the NBS report, month-over-month inflation was 0.74%, significantly lower than the 1.99% recorded in July, indicating that price increases are slowing across Nigeria
“Compared to the headline inflation rate of 21.88 percent in July 2025, the headline inflation rate dropped to 20.12 percent in August 2025,” the agency said.
The main driver of inflation in Nigeria, food inflation, also decreased in August but stayed high. The index fell from 37.52 percent in August 2024 to 21.87 percent year over year. Food inflation decreased to 1.65 percent monthly from 3.12 percent in July.
The US Dollar Index (DXY), which gauges the US dollar’s (USD) value against a basket of six other currencies, stays steady at 96.70 as investors increase bets on a rate cut by the Federal Reserve (Fed) later this week.
However, the event may be clouded by concerns about political influence on the independent central bank, given Trump’s ongoing criticism of Fed Chair Jerome Powell for his rate decisions and his actions in firing Governor Lisa Cook, which led to a legal dispute.
U.S. retail sales increased by 0.6 percent in August, for the third consecutive month, and at a faster rate than expected, according to a report released by the US Census Bureau on Tuesday. Latest American economic data indicated that US consumers were resilient despite a weakening job market, persistent inflation, and slowing economic activity.
Currency traders bet that the US Federal Reserve will cut borrowing costs by at least 25 basis points to help the softening labor market at the conclusion of a two-day policy meeting later today.
Additionally, traders will have been factoring in the potential for two more rate cuts by the end of this year.
Additionally, traders will have been factoring in the potential for two more rate cuts by the end of this year.
Fed Chair Jerome Powell’s remarks at ...-meeting press conference and revised economic projections will be closely watched for clues regarding the rate-cut path, in addition to the important rate-cut announcement. The USD may be capped in the interim because of the dovish outlook.
The appeal of the euro is reinforced by expectations that the ECB will not cut rates further and that the Fed may pursue a cycle of rate cuts.