On May 29, 2025, Nigeria’s foreign exchange (FX) market liberalization, initiated in June 2023, has significantly enhanced investor confidence by stabilizing the naira and reducing exchange rate volatility. The Central Bank of Nigeria (CBN), under Governor Olayemi Cardoso, cleared a $7 billion FX backlog, enabling manufacturers to fund letters of credit and foreign companies to repatriate profits, reversing prior exits caused by dollar shortages. The naira, which weakened to N1,609/$ on May 9, strengthened to N1,590.75/$ by May 28 at the official Nigerian Foreign Exchange Market, with the parallel market rate at N1,625/$, narrowing the gap and curbing round-tripping. At the current exchange rate of N1,579/$1 as of May 29, 2025, these reforms underscore a robust FX environment.
The “willing buyer, willing seller” regime has improved FX access, while a $190.4 million CBN injection supports short-term naira stability. Yields on Nigeria’s $1.5 billion 2034 Eurobond dropped to 9.69%, the lowest since its December launch, and a domestic debt auction saw three-fold oversubscription, with Open Market Operation bills allotted at 21.45%, down from 22.65%. Dr. Ifeanyi Uba of Commercio Partners noted reduced exchange rate volatility and a predictable naira depreciation, enhancing Nigeria’s appeal to foreign investors. The country’s sovereign risk spread hit its lowest since January 2020, reflecting confidence in reforms despite global trade tensions.
Portfolio manager Emre Akcakmak of East Capital praised improved currency liquidity and profit repatriation, while Samir Gadio of Standard Chartered highlighted robust nominal yields and lower global risk correlation as drivers of portfolio inflows. Despite challenges like inflation and a 41.4% naira depreciation in 2024, Fitch Ratings upgraded Nigeria’s outlook to stable, citing coherent reforms. The World Bank projects 3.6% GDP growth for 2025, though sustained recovery requires addressing structural issues like power supply and oil sector transparency. Posts on X echo optimism about FX liquidity and investor confidence, aligning with Bloomberg’s report of a stable naira enabling better planning.
