The Central Bank of Nigeria (CBN) has declared that its ongoing monetary and foreign exchange reforms are beginning to produce tangible results, citing a significant reduction in the gap between the official naira exchange rate and Bureau de Change (BDC) rates, alongside a sustained rise in the country’s external reserves.
The apex bank said the spread between the official exchange rate and the parallel market has now narrowed to below two per cent, describing the development as a clear indication of improved stability in Nigeria’s foreign exchange market.
CBN Governor, Olayemi Cardoso, disclosed on Tuesday during the CBN Fair held in Gombe State. He was represented by the Acting Director of Corporate Communications and Investor Relations, Hakama Sidi-Ali.
According to Cardoso, the reforms introduced by the apex bank since 2023 have significantly reduced distortions in the foreign exchange market while restoring investor confidence in the Nigerian economy.
“The naira continues to strengthen, with the spread between official and Bureau de Change rates now below two per cent,” Cardoso stated, attributing the improvement to disciplined monetary tightening, exchange rate reforms and enhanced transparency in the foreign exchange market.
The CBN governor noted that the narrowing gap between official and parallel market rates marks a sharp contrast to the wide disparities experienced before the implementation of the current reforms.
He said the development reflects growing confidence in the official foreign exchange market and the effectiveness of policies aimed at improving liquidity and market efficiency.
Beyond exchange rate stability, Cardoso highlighted the country’s growing external reserves as another major indicator of economic progress.
Nigeria’s foreign reserves recently climbed above “$52.5 billion”, surpassing the CBN’s annual target and reaching their highest level in about 17 years. The increase, according to the apex bank, has been driven by sustained foreign exchange inflows and renewed confidence among domestic and international investors.
He explained that stronger reserves provide the country with a greater buffer against external economic shocks while strengthening the CBN’s ability to support exchange rate stability and meet international obligations.
Cardoso also outlined a series of reforms introduced over the past 34 months to reposition Nigeria’s financial system and stimulate long-term economic growth.
Among the initiatives are the unification of the foreign exchange market, banking sector recapitalisation, the introduction of the Non-Resident Bank Verification Number (NRBVN), the B-Match foreign exchange trading platform, and the Nigeria Payments System Vision 2028.
According to him, these reforms are designed to improve financial market efficiency, attract investment, create employment opportunities and ultimately reduce poverty.
The CBN governor further revealed that the bank, in collaboration with the Financial Markets Dealers Association, has introduced the Nigerian Overnight Financing Rate (NOFR), a benchmark interest rate for short-term funding transactions.
He explained that the new benchmark would provide a transparent, market-driven reference rate, improve price discovery and align Nigeria’s money market with global best practices.
The apex bank also reported continued gains in the value of the naira at the official market. The local currency closed at N1,362 per dollar on Tuesday, appreciating slightly from N1,365 per dollar recorded on Monday, reflecting continued stability in the official foreign exchange market.
Although Nigeria’s external reserves experienced a modest decline after hitting a recent peak, the CBN maintained that the overall position remains significantly stronger than in previous months.
Recent CBN data showed that reserves fell by about $114 million over seven days, declining from approximately $52.04 billion to $51.92 billion between July 23 and July 29.
Daily figures indicated reserves stood at $52.03 billion on July 23, $52.02 billion on July 24, $51.97 billion on July 27, $51.94 billion on July 28 and $51.92 billion on July 29.
Despite the temporary decline, the reserve level remains substantially higher than the $51.46 billion recorded at the end of June, representing an increase of roughly $463 million over the period.
The country’s reserve position has shown consistent growth over recent months. External reserves rose from $49.80 billion at the beginning of June to $51.04 billion by June 18 before closing the month at $51.46 billion.
The upward trend continued into July, with reserves increasing from $51.53 billion on July 3 to $51.58 billion on July 6, $51.64 billion on July 7 and $51.71 billion on July 8, underscoring the sustained inflow of foreign exchange despite short-term fluctuations.
The CBN maintains that its ongoing policy reforms are laying the foundation for a more stable foreign exchange market, stronger investor confidence and a resilient Nigerian economy, even as it continues to monitor inflation, exchange rate movements and global economic developments.
WHAT YOU SHOULD KNOW
The CBN says its monetary and foreign exchange reforms are strengthening the naira, narrowing the gap between official and parallel market exchange rates to below 2%, while maintaining strong external reserves despite recent fluctuations.
