CBN Bolsters Efforts to Stabilize Naira as Forex Speculation Rises

The Central Bank of Nigeria Governor, Olayemi Cardoso, has reaffirmed the bank’s determination to safeguard the country’s foreign exchange market by curbing activities that threaten the stability of the naira.

This statement follows a slight depreciation of the naira at the official foreign exchange market on Tuesday, closing at N1,532.39/$ compared to N1,531.19/$ on Monday — a marginal decline of 0.08 per cent, signaling relative stability despite ongoing market fluctuations.

In the Bureau De Change segment, the exchange rate remained steady at N1,570/$ across both days, reflecting a stable gap between official and parallel market rates.

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Cardoso underscored the bank’s stance at the February 2025 Monetary Policy Committee meeting, released on Tuesday via the CBN’s website.

“Given the importance of the exchange rate in the fight against inflation and the sustenance of economic recovery and broader financial stability,” he stated, “we must maintain a heightened level of surveillance in our foreign exchange market and root out any bad actors and practices that threaten the smooth functioning of the market and stability of the exchange rate. The Central Bank has an unwavering commitment to this objective.”

The CBN has introduced various reforms to stabilize the naira, restore investor confidence, and align the FX market with market realities. These measures include launching the Electronic Foreign Exchange Matching System (B-Match) and the Nigeria Foreign Exchange Code, aimed at enhancing transparency, encouraging ethical conduct, and boosting operational efficiency.

Cardoso highlighted that these reforms are already showing positive outcomes, pointing to the naira’s relative appreciation and improved market liquidity. He attributed these gains to renewed foreign investor confidence, strengthened by steady remittance inflows, export proceeds, and foreign direct investment.

Investor sentiment is reportedly shifting towards the official FX window due to reduced speculative activity, further reinforcing the CBN’s interventions.

At the MPC meeting, which maintained the Monetary Policy Rate at 27.50 per cent, the committee evaluated the impact of these policies on inflation and financial stability. They acknowledged that FX reforms and tighter monetary measures are gradually easing inflationary pressures, supported by the National Bureau of Statistics’ rebasing of the Consumer Price Index.

Despite progress, Cardoso noted that the FX market remains a critical pressure point in Nigeria’s macroeconomic landscape. He stressed the need for continued vigilance and stringent regulatory oversight to curb malpractice.

He further emphasized that ensuring stability in the FX market is essential for broader economic recovery and resilience, particularly in light of ongoing structural adjustments, such as the removal of fuel subsidies and fiscal policy reforms.

The February MPC communique also highlighted broader economic improvements, including a positive current account balance, increased oil production, and robust external reserves — factors enhancing the CBN’s ability to manage liquidity and defend the naira.

Cardoso concluded that while challenges persist, the alignment of fiscal and monetary policy, institutional reforms, and targeted surveillance are crucial to strengthening Nigeria’s financial system and fostering sustainable growth.