No More N1,600/$: CBN Governor Cardoso Speaks as Naira Hits Two-Month High
In remarkable progress for Nigeria’s currency markets, the naira soared to a two-month high of N1,565.46 per dollar at the official foreign exchange (FX) market on Wednesday. This reflects a continued trend of relative stability persisting over the last few months.
Data from the Central Bank of Nigeria (CBN) showed that the last time the naira traded near this level was on April 4, 2024, when the dollar was exchanged at N1,567.02 on the Nigerian Foreign Exchange Market (NFEM). By the end of Wednesday’s trading session, not only did the naira rise by N13.82 against the dollar, but it also marked a 0.9% gain from the N1,579.28 reported on Tuesday in the official FX window.
Progress was not limited to the official markets. The naira also appreciated in the parallel black market, where it settled at N1,605 per dollar compared to N1,610 noted on the preceding Monday and Tuesday, showing a gain of N5.
The CBN’s governor, Olayemi Cardoso, attributed this enhanced stability of the naira to the apex bank’s systematic and purposeful reform initiatives. Highlighting one of the significant shifts in the nation’s foreign exchange scenario, he noted a remarkable reduction in the disparity between official and alternative exchange rates.
Cardoso emphasized that these positive developments were driven by the Federal Government’s unwavering commitment to reform and clearer policy directions. “Thanks to our sustained reforms and enhanced policy transparency, the naira has stabilized at a far more sustainable level relative to the U.S. dollar. For the first time in years, the disparity between the official and parallel market rates has virtually disappeared, and speculative arbitrage opportunities have been drastically reduced,” he stated.
These reforms have effectively minimized distortions within the FX market, according to the CBN Governor. A significant restoration of investor confidence has been detected, stemming from the return of relative currency stability, which has encouraged an increase in independent foreign exchange inflows through formal channels. This diversification of foreign exchange sources is gradually reducing Nigeria’s dependence on oil.
Moreover, Cardoso highlighted the growth of Nigeria’s external reserves, a crucial indicator of the country’s economic stability. “Our foreign exchange reserves have now risen to over $38 billion, giving us close to 10 months of import coverage. This provides the country with a more robust buffer to withstand external shocks such as falling oil prices or global market volatility, thereby protecting the economy,” he explained.
Analysts from FSDH Merchant Bank Limited’s research division suggested that the CBN should maintain its leading role in overseeing the foreign exchange market. They stressed the importance of continuing initiatives that enhance market liquidity and bolstering investor confidence.
However, they cautioned that relying solely on monetary policies would not be sufficient for sustainable economic stability. Their economic assessment indicates that, to tackle inflation, promote macroeconomic balance, and ensure long-term growth sustainability, it is vital to pursue structural changes along with better budgetary discipline.
Recent interventions such as the $190 million action by the Central Bank of Nigeria have helped keep the naira stable across different markets. Experts agree that this stability is key to encouraging investor confidence and strengthening trust in the Nigerian economy.
The naira’s steady performance, despite facing both local and global challenges, reflects its resilience and the effectiveness of the CBN’s strategic efforts. This positive trajectory promises a more stable and promising economic future for Nigeria.
As the country continues to strive for economic excellence and stability, the efforts of the CBN and the Federal Government appear promising, indicating a bright future for the Nigerian economy and its currency on the global stage.
