PAUL OGBUOKIRI 
After a series of surgical reforms by the Central Bank of Nigeria and the Federal Government in the past two years, there appears to be a light at the end of the tunnel. PAUL OGBUOKIRI reports:
From all indications, the projections by the Central Bank of Nigeria (CBN) on Naira stability and improved foreign reserves are coming into reality following recent developments in the economy. While the local currency had not done so badly in the past, the third quarter of the year has, however, seen it in a remarkably stable position as it has continued to appreciate alongside strong reserves.
For now, speculation is at an all time low as the gap between the official and parallel market rates has significantly dropped. The Naira has sustained a rally across markets in recent months, trading at N1, 455/$ at the parallel markets, and N1, 475/$ at the official window, its strongest position this year.
Drive
The rally has been attributed to a surge in foreign reserves to $43.05 billion and drop in speculative FX activities as the impact of the Central Bank of Nigeria (CBN’s) economic reforms continue to drive positive sentiments and confidence across markets. A country’s currency is an instrument of her pride.
For the Nigeria Naira, a turbulent past that saw it lose its significant value is almost over. The ongoing recovery of the Naira has been attributed to several factors. The local currency rebound is being driven by a combination of stronger demand for the Naira, reduced speculative trading, and rising foreign reserves now at $43.05 billion.
Besides, the forex reforms instituted by the Central Bank of Nigeria (CBN) under the leadership of Olayemi Cardoso are now yielding great benefits from reduction in forex speculation and narrowing of gaps between official and parallel markets.
The CBN leadership has continued to take major steps to keep the Naira stable in line with its exchange rate stability objective. The apex bank is boosting FX supply to retail end users, reducing distortions in the market and maintaining effective foreign reserves management and accretions.
The injection of liquidity into the market and rising compliance with FX regulations have reduced sharp depreciation of the Naira at official and parallel markets and buoyed foreign investors’ interest in the domestic economy.
The Naira stability is also driven by inflows from Foreign Portfolio Investors (FPIs), substantial contributions from International Oil Companies (IOCs), and the CBN’s interventions to authorised dealers. There is also renewed interest of Foreign Portfolio Investors (FPIs) in the FX market— driven by improved market confidence, a more efficient FX framework, and strengthening macroeconomic conditions.
The impact is a rise in foreign reserves and steady Dollar inflows. The CBN chief, Cardoso, recently announced that gross external reserves remained robust at $43.05 billion on September 11, 2025, compared with $40.51 billion at end-July 2025 with an import cover of 8.28 months.
“Similarly, the second quarter 2025 current account balance recorded a significant surplus of $5.28 billion compared with $2.85 billion in the first quarter of 2025,” Cardoso stated during the 302nd monetary policy committee meeting held this week in Abuja.
Currency dealers’ wrong move
A Bureaux De Change (BDC) trader based in Marina, Central Lagos, Garuba Sarki, said many dealers lost huge funds as they sold below purchase rates as exchange rate gap narrowed. “I know some BDC operators that sold Dollars below the purchasing rate. This is expected to continue in the weeks ahead. Also, the expected Dollar inflows to the economy will help strengthen the Naira position against the Dollar,” he said.
Analysts at Commercio Partners attributed the rally and gradual narrowing of the exchange rate gap to a combination of stronger demand for the Naira, reduced speculative trading, and improved foreign reserves. Head of Research at Commercio Partners, Ifeanyi Ubah, expressed optimism that the positive sentiment would be sustained in the near term, supported by increasing external buffers.
“Nigeria’s rising external reserves are reflecting a healthier external position for the country. With reserves strengthening, speculative activity subsiding, and oil earnings supporting inflows, many market watchers believe the Naira’s current rally has a stronger foundation compared to previous cycles of volatility,” he said.
However, other experts caution that sustaining this momentum will depend on the government’s ability to maintain macroeconomic discipline, boost crude oil production, and diversify export earnings. President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, attributed the ongoing stability of the Naira against Dollar and other world currencies to the CBN’s policies.
Gwadabe said key policies like the Foreign Exchange (FX) Code, rising investors confidence, and foreign direct investment supporting policies are effectively putting FX speculators in check. He said the FX Code implementation is comprehensively addressing various aspects of market conduct and practices.
For instance, the policy authorises the CBN to establish and enforce directives regarding the standards for financial institutions under which FX deals are to be conducted. Gwadabe said the code further entrenches transparency and accountability in the FX market, and continually sustains Naira stability and rally.
He also backed CBN’s position that all institutions engaged in the foreign exchange market must also provide the CBN with a detailed implementation plan outlining how they intend to achieve full compliance with the FX Code. These plans are expected to be formally approved and signed by the institution’s board of directors, and it must be accompanied by relevant extracts from the board meeting, where the plan was reviewed and endorsed.
Cardoso had at the launch of the Nigeria Foreign Exchange Code (FX Code), emphasised integrity, fairness, transparency, and efficiency as critical pillars for driving Nigeria’s economic growth and stability. He said that the FX Code was built on six core principles: ethics, governance, execution, information sharing, risk management and compliance, as well as confirmation and settlement processes.
These principles, he explained, aligned with international standards while addressing the unique challenges within Nigeria’s foreign exchange market.
Affirmation
According to Cardoso, “the FX Code represents a decisive step forward, setting clear and enforceable standards for ethical conduct, transparency, and good governance in our foreign exchange market. The era of opaque practices is over. The FX Code marks a new era of compliance and accountability.
Under the CBN Act 2007 and BOFIA Act 2020, violations will be met with penalties and administrative actions.” Besides the FX Code, the apex bank also introduced the Electronic Foreign Exchange Matching System (EFEMS), which has proven effective in other economies in enhancing the functionality of the foreign exchange market.
The EFEMS was meant to check forex market distortions, eliminate speculative activities and instill transparency. The EFEMS, which is commonplace in developed and developing markets, offers real-time information on currency rates, trading volumes, and market activity. Additionally, the CBN lifted the 2015 restriction barring 41 items from accessing FX at the official market to enhance trade and investment.
These reforms and developments reflect the bank’s commitment to creating an enabling environment for inclusive economic development. However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance. Gwadabe said the policy shifts showed the level of creativity, policy and hard work that Cardoso puts in ensuring that more forex flows into the economy and remain accessible to businesses.
Cardoso had upon assuming office in October 2023, prioritised reforms to rebuild Nigeria’s economic buffers and strengthen resilience. In the foreign exchange market, the apex bank faced a backlog of over $7 billion in unfulfilled commitments and a fragmented FX regime characterised by multiple forex rates, which had encouraged arbitrage opportunities.
“Over the past year, we have undertaken critical reforms to unify Nigeria’s exchange rate, eliminating distortions and restoring transparency. This unification has enabled us to clear the outstanding foreign exchange obligations, giving businesses—ranging from manufacturers to airlines the confidence to plan and invest in the future.
To further enhance the functionality of the foreign exchange market, we are introducing an electronic FX matching system, which has proven effective in other markets,” Cardoso said. Foreign capital inflows to the domestic economy remain crucial elements in the drive to achieving monetary and fiscal policy stability.
The apex bank is cultivating more sources of FX to increase Dollar inflows, boost access to manufacturers and retail end users. From moves to boost Diaspora remittances through new product development, the granting of licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to Naira liquidity for IMTOs, the CBN has simplified Dollar-inflow channels for FX dealers to boost business and economic growth.
As part of its efforts to boost Diaspora remittances and support Naira stability, the CBN recently announced the introduction of two new financial products designed to serve Nigerians living abroad.
Offshore inclusion
The Non-Resident Nigerian Ordinary Account and the Non-Resident Nigerian Investment Account were created to streamline remittances, encourage investments, and foster financial inclusion among Nigerians in the Diaspora. It said: “The Central Bank of Nigeria is pleased to inform the general public of the introduction of the Non-Resident Nigerian Ordinary Account and Non-Resident Nigerian Investment Account targeted at Nigerians in Diaspora.”
The initiative is also expected to provide a secure and efficient platform for managing funds and investing in Nigeria’s financial markets. Since the beginning of this year, eligible NRNs have continued to get the opportunity to own any of the Non-resident Nigerian accounts.
The Non-Resident Nigerian Ordinary Account was designed to facilitate remittances by allowing non-resident Nigerians to remit foreign earnings into Nigeria and manage funds in foreign currency or Naira. Deposits from sources such as salaries, allowances, and dividends are supported.
