CBN Governor Highlights Success in Reducing Dollar Exchange Rate Disparity
The Governor of the Central Bank of Nigeria, Olayemi Cardoso, has officially confirmed that recent reforms in the nation's foreign exchange market have significantly narrowed the gap between the official and parallel market exchange rates for the US dollar. Speaking at an event in Lagos, Cardoso detailed how deliberate policy actions have transformed the forex landscape, enhancing transparency and efficiency.
Dramatic Reduction in Premium Between Markets
Cardoso revealed that the premium between the official and parallel dollar rates has plummeted from approximately 50% in 2022 to less than 2% on average in 2025. This sharp decline marks a major milestone in the central bank's efforts to stabilize the Nigerian currency and restore order to the foreign exchange system. The reforms have effectively eliminated the previous system of multiple exchange rates, which Cardoso noted had disproportionately benefited only a privileged few, thereby fostering a more equitable market environment.
Naira Performance and Market Liquidity Improvements
In a recent development, the naira appreciated by about 2% last week, trading at N1,366.23 per dollar in the official market. Meanwhile, the parallel market rate remained steady at N1,410 per dollar, reflecting the reduced volatility and increased stability. Cardoso emphasized that these improvements are not accidental but the result of strategic efforts to rebuild trust and strengthen confidence among both domestic and international investors. He stated, "Our commitment to transparent, well-governed, and functional markets is clear in the foreign exchange market."
The governor further explained that the reforms have boosted liquidity, allowing market participants to transact more efficiently without relying heavily on central bank interventions. "Today, the foreign exchange market operates with far greater liquidity and efficiency. The backlog of unmet demand has been cleared, and market participants can transact without relying on extraordinary Central Bank interventions," Cardoso added.
Increased Capital Inflows and Strengthened Reserves
As a direct consequence of these reforms, Nigeria has witnessed a substantial increase in capital and investment inflows. Cardoso disclosed that there has been almost a 200% rise in these flows between 2023 and 2025, signaling growing investor confidence in the Nigerian economy. Additionally, the country's external reserves have strengthened, recently exceeding $50 billion. This growth reflects structural improvements in Nigeria's balance of payments and underscores the positive impact of the reforms on the nation's financial health.
Foreign reserves play a crucial role in supporting currency stability and protecting against external shocks. They enable the Central Bank of Nigeria to intervene in the forex market when necessary, influencing the supply and demand of the naira to maintain equilibrium. The accumulation of reserves above $50 billion provides a robust buffer, ensuring Nigeria's ability to meet international obligations and safeguard economic resilience.
Conclusion: A Path to Sustained Stability
The Central Bank of Nigeria's proactive measures have yielded tangible results, narrowing the exchange rate gap and fostering a more stable forex market. With enhanced liquidity, increased investor confidence, and strengthened reserves, Nigeria is poised for continued economic growth. Cardoso's remarks highlight the importance of sustained reforms and transparent governance in achieving long-term financial stability and attracting global investment.
