Nigeria’s naira is mounting one of its strongest recoveries in years, supported by far-reaching Central Bank reforms, rising foreign reserves, and a sharp decline in speculative activity in the foreign exchange market.
At the parallel market, the naira now trades around ₦1,460 to the U.S. dollar, while the official rate stands at ₦1,475/$—its best performance in 2025. The narrowing gap between the two markets reflects growing alignment, which analysts attribute to recent policy measures by the Central Bank of Nigeria (CBN).
External reserves have climbed to $43.05 billion, helping restore market confidence. The CBN’s reform drive—spanning exchange rate unification, the rollout of the FX Code, and the introduction of the Electronic Foreign Exchange Matching System (EFEMS)—has begun reshaping Nigeria’s foreign exchange landscape.
Since assuming office in October 2023, CBN Governor Olayemi Cardoso has made restoring credibility, transparency, and resilience in the FX market a top priority. His administration cleared over $7 billion in FX backlogs, unified multiple exchange rates, and enhanced liquidity through inflows from international oil companies and foreign portfolio investors.
By improving transparency and enforcing compliance, the CBN has curtailed distortions and speculative trading that once drove steep depreciation. Cardoso’s prudent reserves management has also strengthened the country’s external position. As of September 2025, Nigeria’s $43.05 billion in reserves provides more than eight months of import cover—well above the three-month global benchmark.
The reforms have reignited investor confidence, drawing back foreign portfolio investors who had previously exited due to uncertainty. Oil exports and rising diaspora remittances have added further momentum. Nigeria’s current account surplus rose to $5.28 billion in the second quarter of 2025 from $2.85 billion in the first quarter, according to CBN data.
The rally has hit speculators hard. “Some BDC operators sold dollars below their purchase rates,” said Garuba Sarki, a Lagos-based currency trader. “Speculation is no longer profitable as more inflows strengthen the naira.”
Analysts say the current rebound is more sustainable than past episodes. “With reserves strengthening, speculative activity declining, and oil earnings supporting inflows, the naira’s rally has stronger fundamentals,” said Ifeanyi Ubah, Head of Research at Commercio Partners.
One of the boldest policy steps under Cardoso is the Nigeria Foreign Exchange Code, which sets ethical and governance standards for FX dealings. “The era of opaque practices is over,” Cardoso said, warning that violations would attract penalties under the CBN Act 2007 and the BOFIA Act 2020.
The EFEMS platform complements these reforms by providing real-time data on currency rates and trading activity—enhancing transparency and curbing manipulation. The CBN has also lifted the 2015 restriction on 41 items barred from FX access, creating new opportunities for importers and manufacturers.
To deepen FX inflows, the apex bank launched two diaspora-focused products: the Non-Resident Nigerian Ordinary Account and the Non-Resident Nigerian Investment Account, both designed to facilitate remittances and investments in local markets.
While the gains are clear, analysts warn that sustaining naira stability will depend on fiscal discipline, higher crude oil output, and economic diversification. Still, for now, Nigeria’s currency appears on a stronger footing—backed by rising confidence, improved transparency, and the most ambitious set of CBN reforms in recent memory.
