Forex Market Speculators Struggle Amid CBN’s Regulatory Reforms and Strengthened Naira

The Nigerian foreign exchange (forex) market has been facing a major overhaul as the Central Bank of Nigeria (CBN) intensifies regulatory measures aimed at stabilizing the exchange rate and curbing speculation. With the country’s currency, the naira, experiencing a sharp decline in value over the last two years, from N460.94/$ in May 2023 to N1,608.60/$ in May 2025, the need for reforms has become critical. Speculators, who thrived in the volatile market, are now being squeezed out by these new measures.

Under the leadership of Governor Olayemi Cardoso, the CBN has introduced significant reforms, including the floatation of the naira and the establishment of new transparency frameworks like the Electronic FX Matching System (B-Match) and the Nigeria Foreign Exchange Code. These changes aim to eliminate the multiple exchange rates, enhance liquidity, and reduce the gap between official and parallel market rates. The reforms have been instrumental in improving market transparency and efficiency while making it harder for speculators to profit from currency fluctuations.

Although the flotation of the naira caused the currency to lose about 54% of its value in 2024, it also helped bring greater stability to the market, resulting in improved forex inflows from various sources such as diaspora remittances and export earnings. Despite the challenges, the CBN’s initiatives have been positively recognized by institutions like Fitch Ratings, which recently upgraded Nigeria’s credit outlook due to these policy reforms. This move signifies increased global confidence in Nigeria’s economic direction.

Governor Cardoso has emphasized that these efforts to stabilize the naira are essential for strengthening Nigeria’s economic resilience. He noted that the country’s foreign reserves now exceed $38 billion, providing nearly 10 months of import cover. The increased stability has also attracted greater foreign investment, with global financial institutions, including JP Morgan, expressing interest in expanding their operations in Nigeria. The recent developments indicate that the country is gradually moving from a position of vulnerability to one of growing economic strength.

However, the CBN acknowledges that Nigeria’s recovery is still a work in progress. The country continues to grapple with high inflation, food insecurity, and energy challenges, which impact overall economic stability. Yet, experts, including Bismarck Rewane, predict that 2025 will mark a turning point, with Nigeria’s economic reforms setting the stage for sustained growth. As Cardoso pointed out, the government remains committed to maintaining disciplined monetary policies, which will be crucial in mitigating inflation and boosting investor confidence in the years to come.

Source: Punch