FX Floodgates Open: Naira Surges to 10-Month High as CBN Reforms Trigger Massive Investor Confidence

The Nigerian Naira has hit a significant milestone, strengthening to a 10-month high against the US dollar in the official Nigerian Foreign Exchange Market (NFEM). This latest surge is a direct consequence of sustained and strong foreign exchange (FX) inflows, indicating a robust return of investor confidence following the aggressive market reforms by the Central Bank of Nigeria (CBN).

The Naira’s appreciation marks a positive turning point, which market analysts attribute primarily to the deliberate and transparent policy shifts under the current CBN leadership. Key reforms credited for boosting dollar supply include the concerted effort to clear the backlog of verified FX obligations and the bold decision to lift restrictions on access to foreign exchange for 43 previously banned commodities. These measures have drastically improved market liquidity and stability.

CBN Governor, Olayemi Cardoso, recently underscored the success of these policy interventions, highlighting that the official market’s rate is now closely aligned with the parallel market. “The gap between the official and parallel market rates has narrowed from about 50% to less than 2%,” he stated, affirming the near-unification of the country’s exchange windows. This convergence is seen as vital for eliminating arbitrage and promoting a more orderly, professional foreign exchange market.

The positive trend is further supported by the CBN’s tighter monetary policy stance, which has made Naira-denominated assets more attractive to Foreign Portfolio Investors (FPIs). This renewed appetite for Nigerian assets has provided the necessary supply push to the market, driving the currency’s value up.

While the market awaits the official close rate for the latest trading day, data from the NFEM shows the Naira’s steady recovery, reinforcing the narrative that consistency in policy implementation is crucial for long-term economic stability. The successful stabilization of the exchange rate is a key factor in the fight against inflation and a foundational pillar for Nigeria’s broader economic recovery.