CBN FX Reforms Supercharge Capital Inflows, Strengthen the Naira

Nigeria’s foreign exchange market is showing remarkable recovery, and the numbers speak for themselves. Central Bank of Nigeria (CBN) Governor Olayemi Cardoso says ongoing FX reforms have not only boosted capital inflows but also improved market liquidity, restored confidence in the Naira, and strengthened the country’s macroeconomic stability.

Cardoso made these remarks on Thursday in Lagos, while delivering a distinguished alumni lecture at St. Gregory’s College during its Founder’s Day celebration, where he highlighted the progress achieved under Nigeria’s revamped FX policy framework.

According to Governor Cardoso, the reforms were designed to tackle long-standing distortions in Nigeria’s FX market, unify the exchange rate system, and promote transparency.

“Through deliberate policy actions, we eliminated the system of multiple exchange rates and slashed the parallel market premium from around 50% in 2022 to less than 2% on average in 2025,” he said.

These reforms have transformed the FX market, improving price discovery, boosting liquidity, and reducing the need for frequent CBN interventions. Businesses and investors now operate in a more predictable and transparent environment; a stark contrast to the fragmented system of the past.

Governor Cardoso revealed that investment flows into Nigeria have jumped nearly 200% between 2023 and 2025, reflecting growing confidence from both local and foreign investors.

Official CBN data supports this, showing that foreign exchange inflows reached US$20.98 billion in the first ten months of 2025, a marked improvement over-previous years.

“These reforms have real, measurable impacts. Investors are returning, and confidence in the Naira is being restored,” Cardoso said.

Reserves Strengthen, Inflation Falls

The FX reforms have also contributed to a healthier macroeconomic environment:

• Gross external reserves have risen to $50.45 billion, the highest in 13 years.
• Inflation has eased from a peak of 34% to roughly 15%, reflecting tighter monetary policy and improved market discipline.
• The parallel market premium has collapsed to less than 2%, signaling more efficient price discovery.

The CBN has cleared the backlog of unmet FX demand, reduced arbitrage opportunities, and fostered a more unified and transparent trading system.

Why This Matters for Nigeria

For decades, Nigeria’s FX market suffered from fragmentation and inefficiencies, limiting access for regular businesses while benefiting a select few. The reforms have not only corrected these distortions but also reshaped the investment landscape, making Nigeria more attractive to investors and better prepared to withstand global shocks, including oil price volatility and geopolitical tensions.

“Transparent markets and strong financial institutions are the foundation of sustainable economic growth. These reforms are putting Nigeria back on that path,” Cardoso concluded.

Key Takeaways

• FX reforms have dramatically increased capital inflows, up nearly 200% in two years.
• The parallel market premium has fallen sharply, improving market efficiency.
• Gross reserves are at a 13-year high, strengthening external buffers.
• Inflation has declined, thanks to tighter monetary policy and better market discipline.