External termial not working with multiple Cursor instances

I have two projects opened in two Cursor windows. I use Ghostty as my external terminal. I try to open a new terminal in my first project, and it worked as expected; however, in the second project, opening a new external terminal will use the path of the first project.

Cursor verison: 0.50.4
VSCode Version: 1.96.2
OS: Linux x64 6.14.6-arch1-1