The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has reaffirmed the apex bank’s commitment to cleaning up the foreign exchange (FX) market by eliminating bad actors and maintaining a stable exchange rate as a pillar for economic recovery.
Cardoso made the statement in his personal remarks at the February 2025 Monetary Policy Committee (MPC) meeting, stressing the need for strict regulatory oversight and transparency in Nigeria’s FX market.
A copy of the document was published on the bank’s website on Tuesday and seen by Nairametrics.
According to him, ensuring the smooth functioning of the FX market is central to achieving price stability, fighting inflation, and sustaining the broader economy.
“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,” he said.
FX market reforms driving progress
Cardoso attributed the growing stability in the FX market to recent reforms by the Bank, including the launch of the Electronic Foreign Exchange Matching System (B-Match) and the Nigeria Foreign Exchange Code.
- These initiatives, he explained, have increased transparency, boosted investor confidence, and supported sustained liquidity through foreign investment inflows, export proceeds, and remittances.
- The reforms, according to the governor, have started yielding visible outcomes — such as a stronger naira and reduced speculative activity — contributing to a more market-driven price discovery process for the local currency.
- He added that more FX demand is now channeled through the official window, reducing arbitrage opportunities between the Nigeria Foreign Exchange Market (NFEM) and the parallel market.
This has helped in stabilising the naira and restoring confidence in the system.
Inflation moderating, but vigilance remains
While acknowledging the gradual moderation in inflation following the rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS), Cardoso stressed that inflationary pressures remain a key risk — particularly from food prices and legacy structural issues.
According to the newly rebased data, headline inflation dropped to 24.48% in January 2025, down from 34.80% in December 2024 under the old methodology.
- However, Cardoso emphasised that this should not be viewed as mission accomplished, urging continued policy alignment to ensure a sustained disinflation path.
- He highlighted the importance of complementary efforts between monetary and fiscal authorities, referencing the recently held Monetary Policy Forum where stakeholders committed to deeper coordination.
- Cardoso’s statement also acknowledged broader macroeconomic improvements. These include a positive current account balance, improving oil production at 1.54 million barrels per day, and external reserves of $39.4 billion as of mid-February 2025 — equivalent to about 9.6 months of import cover.
- These indicators, alongside stable interest rates and fiscal policy alignment, signal a gradual return of macroeconomic stability. The CBN Governor reaffirmed the Bank’s resolve to stay the course with its tight monetary policy stance while monitoring risks.
He concluded by reiterating the Bank’s resolve to defend recent gains in the FX market and broader economy through a mix of policy consistency, strong surveillance, and reform execution.
