Market News

Nigeria’s foreign exchange market is witnessing renewed stability as the naira continues to firm up against major currencies, buoyed by a significant rise in daily turnover to $500 million.

The Central Bank of Nigeria (CBN) says the surge reflects growing liquidity and investor confidence following comprehensive reforms in the FX market.

At the Nigerian Foreign Exchange Market (NFEM) on Wednesday, the naira appreciated to N1,442.92 per dollar from N1,446.32 recorded the previous day.

The currency also strengthened in the Bureau De Change segment, closing at N1,455 per dollar in Lagos compared with N1,460 on Tuesday.

Against the British Pound Sterling, the local currency traded at N1,920/£1, slightly firmer than Tuesday’s N1,930/£1.

CBN Governor, Olayemi Cardoso, told journalists during a media briefing in Abuja that the current turnover levels are the strongest the country has seen in years. He credited the improvement to new systems and policy reforms such as the Electronic Foreign Exchange Matching System (EFEMS), which he said has significantly enhanced transparency and efficiency in the market.

“What we are seeing in today’s FX market hasn’t happened before—willing buyers and sellers engaging in an open, transparent system,” Cardoso said. “We now see $500 million a day in turnover, with the CBN staying out of the market on many days. This level of discipline brings stability as everyone plays by the rules.”

The governor said the narrowing gap between the official and parallel markets—now less than 2 percent—is a strong indicator that the reforms are delivering results. The spread was as wide as 60 per cent two years ago when he assumed office.

Cardoso added that the FX environment is now more predictable.

“Nobody is making money at the expense of others. Policy consistency has created a disciplined market where participants can plan with confidence,” he stated.

Despite the notable progress, current turnover remains about half of the daily average recorded 18 years ago. In 2008, FX trading reached $1 billion daily when banks held net open positions of up to 20 percent of their shareholders’ funds. Turnover later dropped to $300–$500 million after regulatory adjustments and plunged to about $60 million in 2016.

In comparison, South Africa’s spot FX market still trades between $4 billion and $6 billion daily.

Cardoso also revealed that Nigeria’s external reserves have climbed to a multi-year high of $44.45 billion—equivalent to 10 months of import cover. He said this has contributed to renewed public confidence in the naira.

“Nigerians are happy to hold the naira today,” he said. “When you travel overseas now, you can pay with your naira card or dollar debit card. The fear that once permeated the FX market is now in the past.”

With liquidity improving and key reforms taking root, analysts say continued policy discipline and transparent market operations will be crucial to sustaining the naira’s upward momentum.