The Nigerian naira showed continued strength this week, appreciating to N1,625/$1 on the parallel market on Wednesday, slightly up from N1,627/$1 recorded on Tuesday. At the official market, the currency also gained ground, closing at N1,588.50/$1, according to data published by the Central Bank of Nigeria (CBN).
This marks the second straight day of gains in the unofficial market, reflecting renewed investor confidence and a more stable foreign exchange environment.
The improvement comes as the CBN, under the leadership of Governor Olayemi Cardoso, highlights key reforms aimed at stabilising the FX market. Speaking at a press conference following the apex bank’s landmark 300th Monetary Policy Committee (MPC) meeting, Cardoso revealed that currency volatility has dropped below 0.5%, a sharp decline from over 4% a year ago.
“This reduced volatility signals increased market stability,” Cardoso stated, attributing the improvement to tighter monetary policies, enhanced transparency, and a unified exchange rate regime.
Key policies credited for the progress include the liberalisation of the foreign exchange market, unification of exchange rates, and stronger FX supply mechanisms. These reforms have been instrumental in restoring macroeconomic confidence, Cardoso noted.
Reserves See Major Boost
The CBN also announced a significant rise in Nigeria’s net external reserves, which have grown from just over $3 billion to approximately $23 billion—a development described by Cardoso as a “quantum leap.” The increase, according to the bank, is linked to improved investor sentiment, renewed market participation, and more transparent reporting of reserve data.
Gross reserves, which hovered around $33–34 billion in early 2024, are expected to climb further, driven by higher oil revenues, reduced fuel import needs, and a growing non-oil export base, particularly in natural gas.
MPC Maintains Policy Rates
At its milestone meeting, the MPC unanimously voted to retain all key policy rates, a decision aimed at consolidating recent gains in macroeconomic stability:
- Monetary Policy Rate (MPR): 27.5%
- Asymmetric Corridor: +500/-100 basis points
- Cash Reserve Ratio (CRR): 50% for deposit money banks, 16% for merchant banks
- Liquidity Ratio: 30%
All 12 committee members endorsed the decision, reinforcing the CBN’s commitment to its current tightening stance to combat inflation and anchor expectations.
As Nigeria navigates ongoing economic reforms, recent currency movements and policy outcomes suggest that the country is making gradual progress toward a more stable and transparent financial system. The coming months will be key in determining whether these gains can be sustained amid evolving global and local economic dynamics.
