Nigeria’s financial landscape is at a crossroads, and the Central Bank of Nigeria (CBN) is steering the ship toward uncharted waters of stability and inclusivity. But here’s where it gets intriguing: while the CBN’s recent moves have brought a rare moment of calm to the volatile foreign exchange market, the real test lies in what remains unfinished—building an economy that leaves no one behind. HELEN OJI and ISAAC CHIBUIFE delve into this pivotal moment, revealing how the CBN’s efforts are reshaping the nation’s financial future.
The naira’s steady performance around the N1,440/$ mark over the past week isn’t just a blip—it’s a sign of a market slowly healing after months of turmoil. Unlike previous rallies driven by fleeting offshore inflows or policy surprises, this stability is rooted in a healthier balance of supply and demand. Bid-offer spreads are narrowing, and order is returning to a market long plagued by chaos. By week’s end, the currency strengthened by 0.69% at the official window, closing at N1,446.74/$, while the parallel market softened slightly to N1,470/$.
And this is the part most people miss: These modest gains are happening against a backdrop of improving liquidity and rising confidence, fueled in part by a 0.68% weekly increase in external reserves to N44.56 billion. CBN Governor Yemi Cardoso has vowed to sustain FX and financial system reforms, ensuring the stability achieved over the past year isn’t just a fleeting victory.
The CBN’s commitment to a willing-buyer, willing-seller framework has been a game-changer, anchoring expectations after a period of reactive, sentiment-driven trading. Last week’s market signals aligned with the apex bank’s broader recovery narrative at its 303rd Monetary Policy Committee (MPC) meeting. By holding the benchmark interest rate at 27%, the MPC highlighted the impact of earlier tightening measures, with inflation plummeting from 34.6% in November 2024 to 16.05% by October 2025—seven consecutive months of disinflation.
At the Chartered Institute of Bankers of Nigeria’s (CIBN) 60th Dinner, Cardoso painted a stark picture of the challenges inherited in late 2023: a paralyzed FX market, a $7 billion backlog, a parallel-market premium above 60%, and entrenched inflation. He credited the return to orthodox monetary policy—ending deficit-monetizing practices and rebuilding rule-based FX operations—as the foundation of the current stabilization.
Food inflation has dropped sharply to 13.12%, while core inflation has also eased. Reserves hit $46.7 billion by mid-November, the highest in nearly seven years, providing 10.3 months of import cover. Crucially, Cardoso emphasized that this reserve growth is organic, driven by market inflows rather than borrowing.
Foreign capital inflows tell a similar story, surging to $20.98 billion in the first ten months of 2025—a 70% jump from 2024 and more than quadruple the 2023 level. The current-account balance has strengthened, bolstering the external sector’s positive outlook.
Over the past two years, the FX backlog has been cleared, and tools like the Nigerian Foreign Exchange Code and Bloomberg’s BMatch platform have enhanced market efficiency. The gap between official and parallel markets has narrowed to under 2%, effectively squeezing out arbitrage—a major source of manipulation.
But here’s the controversial part: To consolidate these gains, the CBN is revising its FX manual to widen market participation and tighten documentation standards. While experts argue this will reduce rigidity, enhance efficiency, and boost liquidity, some question whether these measures will truly benefit smaller players or if they’ll favor larger institutions. What do you think? Will this approach level the playing field, or will it widen the gap?
Economic momentum is building alongside the stable financial market. Output grew by 4.23% in Q2, the strongest in four years, and experts predict even stronger growth in H2, fueled by improving PMI readings. Non-oil exports have surged by over 18% year-on-year, showcasing the benefits of exchange-rate flexibility.
While oil remains significant, its dominance has waned, accounting for just 33% of government revenue and 51% of exports—a far cry from its historical 80% share. Nigeria is now banking on improved international ratings to solidify its gains. Fitch and Moody’s upgrades, along with S&P’s positive outlook, have bolstered confidence, as evidenced by the historic $2.35 billion Eurobond issuance that attracted $13 billion in orders.
The banking recapitalization drive is also gaining traction, with 16 operators meeting the new capital threshold ahead of the March 2026 deadline. Stress tests reveal resilience, though concentration and cyber risks remain concerns.
The MPC’s decision to retain the MPR at 27% is more expansionary than it seems. By adjusting the asymmetry corridor to +50/-450 basis points and lowering the transaction band to 22.5% to 27.5%, the CBN is unlocking more liquidity for private sector lending, fueling economic growth.
Yet, challenges persist. Elevated inflation, global economic headwinds, geopolitical tensions, and domestic security issues demand bold fiscal solutions for inclusive growth. Even with these risks, Cardoso argues Nigeria is more resilient today than ever, backed by record-high reserves and a diversified revenue base.
Here’s the burning question: As Nigeria stands at this pivotal moment, how will it respond to the call for proactive fiscal policy? Will 2026 be the year the economy truly takes off, or will lingering challenges slow its pace? Share your thoughts in the comments—let’s spark a conversation about Nigeria’s financial future.
