Market Stabilization Achieved
Over the past 17 months, the Central Bank of Nigeria (CBN) has taken key steps to fix the gap between the official and parallel market exchange rates. It introduced new policies, opened up the market, and increased transparency. These changes helped stabilize the foreign exchange system.
By early 2025, the naira gained strength in the parallel market. It now trades around N1,500/$, while the official rate stands close at N1,501/$. The small difference between both rates shows a major shift toward stability.
CBN’s Policy Changes Correct Past Mistakes
According to Zeal Akaraiwe, CEO of Graeme Blaque, policy shifts played a huge role in this progress.
“Many complained about the CBN issuing circulars frequently in the past 18 months. But the CBN can’t regulate through body language,” he said.
To fix past errors, the bank had to clearly communicate new rules. Circulars became the best way to guide financial institutions and remove confusion in the market.
BMatch System Improves Transparency
In 2024 alone, the CBN released nearly 20 circulars on FX management. One of the biggest moves was the introduction of Bloomberg’s BMatch system in interbank FX trading.
Akaraiwe noted that BMatch exposed a major information gap in the market.
“For most of 2024, inflows into the economy were higher than outflows. But many didn’t know this,” he said.
Due to this lack of information, panic spread. However, when BMatch launched in December, the naira quickly appreciated by 10%. This happened without any direct intervention from the CBN.
Is the CBN Defending the Naira?
Some believe the CBN is actively defending the naira. However, Akaraiwe disagrees.
He pointed out that in 2024, the bank’s net contribution to the FX market was just 3%. This was a sharp drop from 70-80% in past years.
“In 2022 and 2023, the CBN provided up to 80% of the FX in the market. That looks like a defensive strategy,” he explained.
However, in 2024, the CBN’s market share fell below 10%. After balancing sales and purchases, its actual contribution was just 3%.
Akaraiwe stressed that selling FX is a normal CBN operation. To ensure stability, the bank both sells and buys FX. The goal is to keep the market balanced, not to artificially support the naira.
