CBN Deepens Fight Against Forex Speculators as Naira Slides
The Governor of the Central Bank of Nigeria, Olayemi Cardoso, says the apex bank remains resolute in its commitment to maintaining order in the country’s foreign exchange market by identifying and eliminating bad actors whose activities undermine the stability of the naira.
This came as findings showed that the naira depreciated slightly at the official foreign exchange market on Tuesday, closing at N1,532.39/$ compared to N1,531.19/$ on Monday.
This marks a marginal decline of 0.08 per cent, indicating relative stability despite minor fluctuations in the market. The movement suggests continued volatility within a narrow band as the market adjusts to recent reforms and changing demand-supply dynamics.
At the Bureau De Change segment, the exchange rate remained unchanged at N1,570/$ for both days, reflecting a steady spread between the official and parallel market rates.
The unchanged BDC rate points to relatively stable demand for physical dollars in the informal market, even as the CBN intensifies its surveillance and intervention strategies across FX windows.
The slight depreciation at the official window comes amid broader efforts by the Central Bank of Nigeria to align the FX market with market fundamentals.
Meanwhile, Cardoso made the bank’s position clear in his statement at the February 2025 Monetary Policy Committee meeting, which was released on Tuesday on the apex bank’s website.
The CBN governor stressed the bank’s role in safeguarding the market from practices that threaten price stability and investor confidence.
“Given the importance of the exchange rate in the fight against inflation and the sustenance of economic recovery and broader financial stability,” he said. “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.”
The statement follows a series of reforms introduced by the CBN to stabilise the naira, restore investor confidence, and align the FX market more closely with market principles.
These include the launch of the Electronic Foreign Exchange Matching System (B-Match) and the Nigeria Foreign Exchange Code — initiatives designed to increase transparency, foster ethical conduct, and improve operational efficiency.
Cardoso explained that these reforms are already yielding results, noting a relative appreciation of the naira and improved liquidity in the FX market.
He attributed this to renewed foreign investor confidence, bolstered by sustained remittance inflows, export proceeds, and foreign direct investment.
The apex bank governor added that investor sentiment has continued to improve, with demand shifting increasingly to the official FX window due to reduced speculative pressures.
At the MPC meeting, which retained the Monetary Policy Rate at 27.50 per cent, Cardoso joined other members in assessing the impact of ongoing policies on inflation and financial stability.
The committee noted that the FX reforms and tighter monetary conditions are contributing to a gradual easing in inflationary pressures, especially following the rebasing of the Consumer Price Index by the National Bureau of Statistics.
Despite these improvements, the CBN Governor maintained that the FX market remains a key pressure point in Nigeria’s macroeconomic outlook.
As such, he emphasised the need for ongoing vigilance and strict regulatory oversight to keep the market free of malpractice.
He also acknowledged that maintaining stability in the FX market is not just a monetary goal, but a necessary condition for broader economic recovery and resilience, especially in an environment still adjusting to the removal of fuel subsidies and reforms in the fiscal space.
The February MPC communique also highlighted broader macroeconomic progress, including a positive current account balance, improving oil production levels, and robust external reserves — all of which contribute to the Bank’s capacity to manage liquidity and defend the naira.
Cardoso noted that while challenges persist, the alignment of fiscal and monetary policy, combined with institutional reforms and targeted surveillance, is key to building a more credible and resilient financial system.
