With expanding foreign exchange inflows and a relatively stable naira, which has given businesses the confidence to plan and invest in the economy, the gains of the bold reforms embarked by the Central Bank of Nigeria (CBN) under Governor Olayemi Cardoso are beginning to manifest. However, the apex bank is not resting on its oars, as it is cultivating more sources of foreign exchange to increase dollar inflows and boost access to manufacturers and retail end users, ONYEDIKA AGBEDO writes
As key policies being implemented by the Central Bank of Nigeria (CBN) to support more foreign capital flows to the economy take root, rising foreign exchange (FX) inflows have enhanced exchange rate stability and narrowed the gap between official and parallel market rates of the naira.
The Guardian gathered that the gap between official and parallel market rates narrowed to N34/$ as average monthly foreign exchange inflows hit $5.95 billion.
Analysts attribute the development to the CBN’s doggedness in the implementation of its policies geared towards attracting more foreign capital flows to the economy and supporting the domestic economy.
The Governor Olayemi Cardoso-led CBN continues to entrench price and exchange rate stability in Nigeria’s macroeconomic environment. Sustaining these roles takes a lot of policy implementation, ensuring that domestic and foreign investors’ interest in the economy continues to soar.
Analysis of foreign exchange inflows in the last few months showed that Nigeria attracted nearly $6 billion monthly inflows from May 2025, this year, till date. Industry report also showed that Nigeria’s foreign exchange market witnessed a significant boost in May, with total inflows rising by 62.0 per cent month-on-month (M-o-M) to $5.96 billion, driven largely by increased participation from domestic and foreign investors.
Records showed that this marked one of the highest inflow levels in recent months and signals improving market sentiment amid macroeconomic reforms and a relatively stable naira.
The naira closed the week at N1,570/$ at the parallel market, and N1,536/$ at the official market, creating a rate gap of N34/$.
In an emailed note to investors sighted by The Guardian, analysts at Financial Derivatives Company Limited attributed rising foreign exchange inflows to surge in oil prices and multiple inflow channels created by the CBN.
The apex bank had in recent months activated multiple foreign exchange sources to increase dollar inflows, boost dollar access to manufacturers and retail end users and support naira recovery across markets.
From moves to improve diaspora remittances through new product development to the granting of licences to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the CBN has simplified dollar-inflow channels for authorised dealers and other players in the value chain.
Given that foreign exchange inflows to the economy are strategic in achieving monetary and fiscal policy stability, the CBN puts in a lot of effort in attracting more inflows into the economy.
The CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts, estimated at $23 billion yearly, within a year.
The remittances in the economy is expected to increase based on CBN’s ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth.
For instance, the guidelines for International Money Transfer Services in Nigeria, recently released by the apex bank, marked a significant shift in how IMTOS conduct their operations. This reflects the bank’s ongoing efforts to enhance transparency and efficiency in foreign exchange transactions and to bolster diaspora remittances into Nigeria.
Another circular titled, ‘New Measures to Enhance Local Currency Liquidity for Settlement of Diaspora Remittances’, highlighted the CBN’s commitment to improving the Nigerian foreign exchange market infrastructure by increasing the flow of remittances through formal channels. The circular introduced measures aimed at providing licenced IMTOs with access to naira liquidity from the CBN, facilitating the disbursement of remittances to beneficiaries.
In a report analysing the circular, analysts at Duale, Ovia & Alex-Adedipe, a specialised law firm with experts in its core areas of practice, explained that the guidelines permit IMTOs to conduct payout foreign remittances through agents, who are designated as Authorised Dealer Banks (ADBs).
“They require IMTOs to enter into formal contracts with ADBs outlining the terms and conditions of their engagement. Additionally, IMTOs are required to notify the CBN of the appointment of each ADB. Furthermore, IMTOs are to receive foreign remittances in a designated account maintained with ADBs.”
They explained that the account must be separate from other accounts held by the IMTO. The guideline mandates ADBs and IMTOs to disburse proceeds of foreign remittances to beneficiaries in Naira.
According to them, payments can be made either through a bank account with the ADB or in cash, provided the cash withdrawal does not exceed $200. If a beneficiary does not have an account with the IMTO’s ADB, the ADB will credit the beneficiary’s account with another bank.
These efforts are no doubt yielding the expected dividend as the apex bank recently announced that Nigeria’s Net Foreign Exchange Reserve (NFER) stood at $23.11 billion at the end of last year.
According to the apex bank’s data, this was the highest level in over three years, a marked increase from $3.99 billion at year-end 2023, $8.19 billion in 2022, and $14.59 billion in 2021.
The NFER, which adjusts gross reserves to account for near-term liabilities such as foreign exchange swaps and forward contracts, is widely regarded as a more accurate indicator of the foreign exchange buffers available to meet immediate external obligations.
Gross external reserves also increased to $40.19 billion, compared to $33.22 billion at year-end 2023.
The increase in reserves reflects a combination of strategic measures undertaken by the CBN, including a deliberate and substantial reduction in short-term foreign exchange liabilities, notably swaps and forward obligations.
The strengthening was also spurred by policy actions to rebuild confidence in the foreign exchange market and increase reserve buffers, along with recent improved foreign exchange inflows, particularly from non-oil sources.
Cardoso had upon assuming office in October 2023, prioritised reforms to rebuild Nigeria’s economic buffers and strengthen resilience.
Then, the apex bank faced a backlog of over $7 billion in the foreign exchange market in unfulfilled commitments and a fragmented foreign exchange regime characterised by multiple foreign exchange rates, which had encouraged arbitrage opportunities.
That regime stifled the much needed foreign investment, and led to the depletion of Nigeria’s external reserves, which fell to $33.22 billion in December 2023.
Commenting on the reforms recently, Cardoso said: “Over the past year, we have undertaken critical reforms to unify Nigeria’s exchange rate, eliminating distortions and restoring transparency. This unification has enabled us to clear the outstanding foreign exchange obligations, giving businesses – ranging from manufacturers to airlines – the confidence to plan and invest in the future. To further enhance the functionality of the foreign exchange market, we are introducing an electronic FX matching system, which has proven effective in other markets.”
The result is a stronger and more transparent reserves position that better equips Nigeria to withstand external shocks. The expansion occurred even as the CBN continued to reduce short-term liabilities, thereby improving the overall quality of the reserve position.
“This improvement in our net reserves is not accidental; it is the outcome of deliberate policy choices aimed at rebuilding confidence, reducing vulnerabilities, and laying the foundation for long-term stability.
“We remain focused on sustaining this progress through transparency, discipline, and market-driven reforms,” Cardoso added.
Findings by The Guardian indicated that reserves have continued to strengthen in 2025. While the first quarter figures reflected some seasonal and transitional adjustments, including significant interest payments on foreign-denominated debt, underlying fundamentals remain intact, and reserves are expected to continue improving over the second quarter of this year.
Also, the CBN anticipates a steady uptick in reserves, underpinned by improved oil production levels, and a more supporting export growth environment expected to boost non-oil foreign exchange earnings and diversify external inflows.
Speaking at the recent Cordros Asset Management seminar titled, ‘The Naira Playbook’, Director of Trading at Verto, Charlie Bird, said dollar liquidity dynamic is now more balanced, with foreign investors and airlines able to repatriate funds.
Bird noted that Nigeria is now a darling of foreign investors because of improved dollar liquidity in the economy due to the CBN’s positive reforms.
On his part, President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the policy shifts by the CBN showed the level of creativity and hard work Cardoso puts in ensuring that more foreign exchange flows into the economy and remains accessible to businesses.
He said diaspora remittances to Nigeria, estimated at $23 billion yearly, remain a reliable source of foreign exchange to the domestic economy.
“There are also other sources and policies that are being explored by the apex bank to keep dollar inflows coming,” Gwadabe noted.
According to him, the CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.
