CBN Says Naira FX Gap Narrows Below 2 Percent as Reforms Gain Traction

• CBN says reforms have reduced the gap between official and Bureau de Change exchange rates to below two per cent.

• External reserves remain above $52 billion despite a recent pullback, with the apex bank citing stronger investor confidence.

• The central bank says monetary tightening and FX reforms are beginning to stabilise the economy.

August 5, (THEWILL) — The Central Bank of Nigeria (CBN) says its monetary and foreign exchange reforms are beginning to yield tangible results, with the gap between the official naira exchange rate and Bureau de Change (BDC) market narrowing to below two per cent while the country’s external reserves remain above the $52 billion mark.

CBN Governor Olayemi Cardoso, represented by the Acting Director of Corporate Communications and Investor Relations, Hakama Sidi-Ali, disclosed this during the CBN Fair held in Gombe on Tuesday.

According to the apex bank, the narrowing spread between both markets reflects improving confidence in Nigeria’s foreign exchange framework following a series of reforms introduced since 2023.

“The naira continues to strengthen, with the spread between official and Bureau de Change rates now below two per cent,” Cardoso said, attributing the development to disciplined monetary tightening, exchange rate reforms, and greater market transparency.

FX reforms begin to show results

The CBN said recent reforms, including the unification of the foreign exchange market, banking sector recapitalisation, the introduction of the non-resident Bank Verification Number (NRBVN), the B-Match FX trading platform and the Nigeria Payments System Vision 2028 have helped restore stability to the foreign exchange market.

Cardoso also highlighted the introduction of the Nigerian Overnight Financing Rate (NOFR), developed in collaboration with the Financial Markets Dealers Association, describing it as a transparent benchmark that aligns Nigeria’s money market with global standards.

He said the reforms were designed to promote sustainable economic growth, deepen investor confidence, create jobs, and reduce poverty.

Reserves remain above target despite pullback

The CBN’s assessment comes even as Nigeria’s external reserves eased slightly after recently climbing above $52.5 billion.

The reserves, which had reached a recent high of about $52.04 billion, slipped modestly over subsequent trading sessions, closing at $51.92 billion on July 29.

Despite the decline, reserve levels remain well above the $51.46 billion recorded at the end of June and continue to exceed the CBN’s annual projection.

The reserves had strengthened steadily throughout June and early July, rising from $49.80 billion at the beginning of June to above $52 billion, supported by stronger foreign exchange inflows and improving investor sentiment.

Monetary policy stays tight

The CBN also pointed to signs of improving exchange rate stability in the official market, where the naira appreciated slightly to close at N1,362/$ on Tuesday from N1,365/$ the previous day.

The developments come shortly after the Monetary Policy Committee (MPC), at its 306th meeting held on July 20 and 21, voted to retain the Monetary Policy Rate (MPR) at 26.5 percent, maintaining its tight monetary stance aimed at anchoring inflation and preserving exchange rate stability.

The committee also retained the Cash Reserve Ratio at 45 percent for commercial banks and 16 percent for merchant banks, while leaving the Standing Facilities Corridor unchanged at +50/-450 basis points around the MPR. The CRR on non-TSA public-sector deposits was also maintained at 75 percent.