The Central Bank of Nigeria (CBN) has continued to take major steps to keep the naira stable in line with its exchange rate stability objective. The apex bank has intensified interventions in the market, 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 on domestic economy.
The timely interventions of the Central Bank of Nigeria (CBN) through policy implementations and injection of liquidity into the forex market, effectively halted naira slide and restored stability in the forex market.
Aware of its exchange rate stability mandate, the apex bank recently injected $360 million through authorized dealers into the market, which helped to mitigate a steeper devaluation amid the resurgence of demand pressures.
The official FX rate exchanges at N1,530/$, while the local currency exchanges at N1,580/$ at the parallel market. CBN’s robust interventions — including last week’s selling of $360.00 million to authorized dealers have continued to help stabilize the naira.
The naira stability is also driven by inflows from Foreign Portfolio Investors (FPIs), substantial contributions from International Oil Companies (IOCs), and the CBN’s $18.40 million previous 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.
Analysts at Cordros Research, said the gross FX reserves increased by $12.06 million week-on-week to $38.36 billion, after nine consecutive weeks of decline.
“Concerns about oil receipts underpinned by lower oil prices are likely to temper net FX inflows from Foreign Portfolio Investors, likely sustaining pressure on the naira. Nonetheless, CBN’s sustained market intervention and reduced market distortions are expected to prevent a sharp depreciation of the naira,” the report said.
Group CEO, Baobab Group, Philip Sigwart, said the Nigeria forex market has turned a corner, with stability allowing more companies to invest in the economy.
He disclosed that given the improved business confidence and stability in the forex market, his company will not only inject new capital into its operations, but lend more to businesses.
Sigwart, based in Paris, at the Boabab Group headquarters, spoke during a media briefing in Lagos. He said the volatility in the forex market that made it difficult for businesses to plan and invest, has been addressed, and now is the time to invest and expand its operations in Nigeria to at least 100 branches, targeting N1 trillion balance sheet.
Many other stakeholders have applauded the CBN’s reforms that kept the exchange rate stable, and attracted new wave of investment into the economy.
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 sustain 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.
This 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.
CEO, Countryside Markets Limited, Stevens Michael, said: “For me, the whole idea is just to ensure that there is a lot more sanity in the foreign exchange market because certain characters have really created a whole lot of problems over the years in the foreign exchange market”.
“I think that is what the CBN is trying to do and the more we’re able to sanitise the markets, I think the more stability it will achieve in the foreign exchange market,” he said.
The Governor of the Central Bank of Nigeria (CBN), Olayemi 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.
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 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.
CBN’s policies support remittances inflows
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.
The Non-Resident Nigerian Ordinary Account and the Non-Resident Nigerian Investment Account was 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, alongside spending on family maintenance, education, and healthcare.
On the other hand, the Non-Resident Nigerian Investment Account provides an opportunity for NRNs to invest in Nigeria’s financial markets, including foreign currency-denominated bonds, fixed deposits, and local assets like equities, government securities, and mortgage products.
The CBN explained that both accounts offer currency flexibility, enabling holders to maintain balances in either foreign currency or naira.
Account holders will also be able to convert funds between the two currencies at prevailing exchange rates through authorised dealers.
The Non-Resident Nigerian Investment Account, in particular, was structured to promote investments in Nigeria’s financial instruments, such as the Diaspora Bond, and encourage active participation in the country’s economic development.
The CBN said the introduction of these accounts will harness the economic potential of Nigerians in the diaspora by boosting remittances and fostering investments in critical sectors.
These and other measures, including the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller model, and enabling timely access to naira liquidity for International Money Transfer Operators (IMTOs).
Diaspora remittances are a crucial source of foreign exchange for Nigeria, supplementing both foreign direct investment and portfolio investments.
The CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.
The remittances in the economy is expected to increase based on CBN’s ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth.
In a report: “Diaspora remittances: The power behind Africa’s sustainable growth”, Regional Vice President of Africa at Western Union, Mohamed Touhami el Ouazzani, said remittances may be measured through the movement of money, but their real impact is measured in lives changed.
He disclosed that in 2023 alone, $90 billion flowed into Africa from its global diaspora, an amount that rivals the Gross Domestic Product of entire nations.
He said that remittances symbolize deep ties that keep communities connected across borders. “Families with a breadwinner working abroad depend on these funds to provide vital support for day-to-day needs. They also build the foundation for broader financial stability,” he said.
“Beyond their immediate impact, remittances are powerful drivers of economic change. They fuel infrastructure development, spur entrepreneurship, and promote financial inclusion – all essential for long-term economic development. Ghana’s National Financial Inclusion and Development Strategy (NFIDS) is simplifying access to remittances, while countries like Kenya, Ethiopia and Nigeria are tapping into diaspora bonds to fund infrastructure and other national projects,” he added.
For remittances to be truly transformational, it begins with understanding and meeting people’s aspirations. Ensuring individuals who strive for more can send and receive funds, regardless of their financial status, is crucial. We must cater to diverse needs.
“In a continent renowned for its entrepreneurial spirit, offering multiple channels for remittance access is key. Whether through bank accounts, digital wallets, mobile money apps, or cash pickups, this flexibility ensures that funds are delivered in ways that best suit local realities. Providing innovative and inclusive solutions empowers individuals to not only manage their immediate needs but also to invest in long-term growth opportunities,” he added.
According to him, every remittance is a seed of change – a deliberate investment in a future where borders blur.
“The future of remittances in Africa transcends mere financial support. By strategically directing funds into sectors that need them most, Africa’s diaspora is not just sending money home; they are building resilient economies and challenging traditional models of progress.
“This power demands that we unite with purpose, reimagine prosperity and empower future generations. The question then becomes whether we are prepared to unlock the continent’s true potential and reshape the global narrative of success,” he stated.
Meanwhile, recent data from the International Monetary Fund (IMF’s) Currency Composition of Official Foreign Exchange Reserves (COFER) also point to the rise of nontraditional reserve currencies, including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and the Nordic currencies.
Stakeholders agreed the measures instituted by the CBN under Cardoso have not only lifted the forex market and entrenched long-lasting stability but laid foundation for sustainable economic growth.