CBN’s Strategic Forex Reforms Boost Naira Stability Amid Economic Recovery

Nigeria’s Central Bank (CBN) has made significant strides to stabilize the naira by enhancing the country’s foreign exchange reserves and implementing critical reforms. Since President Bola Tinubu took office in May 2023, Nigeria’s foreign reserves have increased by almost 20%, rising to $38.33bn by March 2025, from $32.11bn in April 2024. This improvement, alongside growing oil production, provides the CBN with the liquidity needed to intervene in the forex market, reducing volatility and boosting confidence among investors.

The country’s oil production, a key driver of foreign exchange earnings, has been recovering. In November 2024, oil output reached 1.7 million barrels per day, marking a 13.3% increase from 2023. This surge in production, coupled with the government’s efforts to resolve the Niger Delta crisis, is expected to further stabilize the forex market. The CBN’s intervention, including a recent $360m injection into the market, has helped curb sharp depreciation in the naira, with the official exchange rate strengthening to 1,531.19/$ by March 2025.

Despite these positive developments, analysts remain concerned about the high exchange rates, which continue to challenge local businesses. The naira’s depreciation has made Nigerian products less competitive on the international market, and economists suggest the CBN focus on closing the gap between the naira and the dollar. Inflation, while declining to 23.18% in February 2025, remains a major issue, further affecting economic conditions for many Nigerians.

The CBN’s policy measures, such as the introduction of the Foreign Exchange Code and the Electronic Foreign Exchange Matching System (EFEMS), are aimed at promoting transparency and reducing speculative activity in the market. Additionally, new financial products tailored for Nigerians in the diaspora, including the Non-Resident Nigerian Ordinary and Investment Accounts, are designed to increase remittances and investment inflows. With these continued reforms, the CBN hopes to foster long-term economic growth and bring tangible benefits to the Nigerian populace.

source: punch