Last week’s Monetary Policy Committee (MPC) meeting and Bankers’ Night offered the Central Bank of Nigeria (CBN) an opportunity to engage Nigerians on the progress made so far in the journey to building a more resilient financial market. But much more, HELEN OJI and ISAAC CHIBUIFE write that the assessment provides an opportunity to consider what is left undone in the efforts to build an inclusive economy.

The naira’s steady performance around the N1,440/$ band over the past week marks more than a moment of calm in Nigeria’s volatile foreign-exchange landscape. It suggests a market slowly regaining equilibrium after months of dislocation.

Unlike earlier rallies fuelled by bursts of offshore inflows or policy surprises, the current stability reflects a healthier balance of demand and supply, narrowing bid–offer spreads and restoring a degree of order long absent in the FX market.

By the end of the week, the currency firmed up by 0.69 per cent at the official window to close at N1,446.74/$, while the parallel market softened marginally to around N1,470/$.

Although modest, these moves occurred against the backdrop of improving liquidity and rising confidence, supported in part by the uptick in external reserves, now at N44.56 billion – up 0.68 per cent week-on-week.

The weekly improvement came after the Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, assured that the apex bank would continue to sustain the FX and financial system reforms to consolidate the stability of the market that started over a year ago.

The improved market liquidity has been underpinned by the monetary authority’s reaffirmation of the willing-buyer, willing-seller framework. The Monetary Policy Committee’s (MPC) signal – minimal direct intervention and a return to market-driven price discovery – has helped anchor expectations after a period of reactive, sentiment-led trading.

Last week’s market signals coincided with a broader narrative of recovery articulated by the apex bank at its 303rd MPC meeting. Keeping the benchmark interest rate at 27 per cent, the committee argued that the effects of earlier tightening are now being felt, particularly in inflation, which has plunged from a peak of 34.6 per cent in November 2024 to 16.05 per cent by October 2025 – seven straight months of disinflation.

Speaking at the Chartered Institute of Bankers of Nigeria’s (CIBN) 60th Dinner, Cardoso painted a stark picture of the conditions inherited in late 2023 – a paralysed FX market, a $7 billion backlog, a parallel-market premium above 60 per cent and entrenched inflation.

He argued that the return to orthodox monetary policy, including ending deficit-monetising ways and means financing and rebuilding rule-based FX operations, formed the bedrock of the current stabilisation.

Food inflation has fallen sharply to 13.12 per cent, while core inflation has also eased. Reserves rose at $46.7 billion as of mid-November – the highest level in nearly seven years – providing 10.3 months of import cover. Importantly, Cardoso emphasised that the reserve build-up is organic, driven by market inflows rather than borrowing.

Foreign capital inflows tell the same story, rising to $20.98 billion in the first ten months of 2025 – a 70 per cent jump over 2024 and more than quadruple the level in 2023. The current-account balance has similarly strengthened, underpinning the positive outlook of the external sector.

In the past two years, the FX backlog has been cleared even as the Nigerian Foreign Exchange Code and Bloomberg’s BMatch platform have been deployed to enhance market efficiency. With the gap between official and parallel markets narrowing to under two per cent, arbitrage, which was a major cause of market manipulation, has been effectively squeezed out.

To consolidate the gains, Cardoso says the bank is committed to a revised FX manual aimed at widening market participation and tightening documentation standards to reinforce a system that now relies on transparent price discovery rather than administrative fiat. This, experts have noted, would reduce market rigidity, enhance efficiency and increase liquidity, which would all enhance the stability of the market.

Alongside the stable financial market, the economic momentum appears to be building. For one, output was up 4.23 per cent in Q2 of the year, the strongest growth in four years. Improving PMI has seen experts projecting even stronger growth in H2. November’s PMI reading was 56.4 points, signalling renewed business confidence even as non-oil exports have grown more than 18 per cent year-on-year, reflecting the benefits of exchange-rate flexibility.

Oil remains important, Cardoso said, but no longer dominant. It accounts for 33 per cent of government revenue and 51 per cent of exports – unlike its historical trend when it was as high as 80 per cent.

Nigeria is counting on an improved international rating to consolidate its gains. For instance, Fitch upgraded Nigeria to B (stable) while Moody’s upgraded it to B3, just as S&P revised its outlook to positive. The country’s recent historic $2.35 billion Eurobond issuance attracted an unprecedented $13 billion in orders, signalling unprecedented market confidence in the country that was almost facing a financial ‘blockade’ a few years ago.

Meanwhile, the banking recapitalisation drive is advancing, pointing to higher financing capacity of the local economy. Ahead of the March 2026 deadline, the CBN boss revealed that 16 operators achieved the new capital threshold. Stress tests of the sector, he added, have indicated resilience, even though concentration and cyber risks remain areas of concern.

At its recent meeting, the MPC retained the MPR at 27 per cent. But the transaction corridor of the discount window does not make the decision less expansionary. With the new asymmetry corridor adjusted to +50/-450 basis points, the transaction band has been lowered to 22.5 per cent to 27.5 per cent from 24.5 per cent to 27.5 per cent, which will ultimately unlock more liquidity for private sector lending to grow the economy.

But despite the gains, the MPC acknowledged unresolved challenges – from still-elevated inflation to global economic headwinds, geopolitical strains and domestic security issues. Some of the challenges require bold fiscal policy solutions to drive a stronger, inclusive growth across sectors.

Even with the risks, Cardoso argued that Nigeria is more resilient to external shocks today than at any point in recent memory. His position is supported by multi-year-high reserves and a diversified revenue base that has reduced the historical concentration risks of commodity trading. How Nigeria responds to the call for a more proactive fiscal policy articulation and implementation will determine the speed at which the economy runs in 2026.