June 14, (THEWILL) — The Nigerian naira has sustained its recovery following a steep decline in value as the foreign exchange reform initiated in 2023 reached its third anniversary on June 14, 2026.The Central Bank of Nigeria (CBN) announced the unification of the foreign exchange market on June 14, 2023, as part of the wider economic reforms of the Bola Ahmed Tinubu-led administration inaugurated on May 29, 2023.
Data from the CBN indicates that as of June 11, 2026, the Naira was trading at N1,365 to a dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM). This is against the official rate of N462 to a dollar, and N770 per dollar at the parallel market – at the start of June 14, 2023 when the unification of the foreign exchange market took place.
The drastic shift resulted in a tumultuous forex market that saw the local currency drop to N664 per dollar at the official rate on June 14, 2023, and N765 to a dollar at the parallel market, signaling the steep decline of the Naira with its attendant high inflation before the CBN introduced sweeping guidelines that arrested the worrying trend.
Regulatory interventions
The measures taken by the CBN to stablise the Naira included the following:
Introduction of Inflation Targeting Framework which marked a major shift in Nigeria’s monetary policy mechanism. This framework was designed to tackle the country’s persistent inflation problem, which has significantly eroded consumer purchasing power.
Lifting the restriction on access to foreign exchange for the importation of 43 commodities (October 12, 2023), a move aimed at promoting orderliness and professional conduct by all Nigerian Foreign Exchange Market participants to ensure market forces determine exchange rates on a ‘willing buyer, willing seller’ principle.
The abolishment of FX market segmentation, and collapse of the previously existing segments into the Investors’ and Exporters’ (I&E) window, renamed Nigerian Foreign Exchange Market (NFEM), which reduced arbitrage opportunities as well as improved investor confidence and enhanced transparency.
The CBN issued guidelines for operating bank accounts for Virtual Asset Service Providers (VASPs), The regulation of VASPs became imperative to curb systemic risks and safeguard financial stability, as unchecked virtual asset activities could pose threats to the broader monetary system.
The CBN also issued a framework for the licensing and operations of International Money Transfer Operators (IMTOs) and released an exposure draft of revisions to consumer protection regulations (January 31, 2024).
The apex bank updated licensing requirements, and capital standards, and introduced a franchise model to improve FX distribution and oversight.
The CBN revoked the operating licenses of 4,173 Bureau de Change (BDC) operators who failed to meet regulatory provisions. This singular action tightened regulatory control over the forex market, thus reducing BDCs’ illegal or noncompliant activities.
Guidelines were issued to International Oil Companies (IOCs) to cap the repatriation of export proceeds at 50% in the first instance, with the balance of 50% repatriated 90 days after the initial inflow. This directive aimed to ensure that a significant portion of export earnings is retained in the domestic market, providing much-needed exchange rate stability while improving forex availability.
To further promote monetary stability, guidelines were issued on June 27, 2024, to Deposit Money Banks (DMBs) on the deposit of foreign currency, setting a maximum limit of $10 million for deposits of $100 and $50 bills and $1 million for lower denominations.
Intensification of its Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), and Cybersecurity measures. These efforts aim to create a more secure investment environment, attract foreign investment, and bolster Nigeria’s global financial reputation.
The CBN issued new guidelines for the Electronic Foreign Exchange Matching System (EFEMS). The guidelines regulate interbank FX trading operations via the Electronic Foreign Exchange Matching System (EFEMS).
Devaluation consequences
Although the sweeping guidelines introduced by the CBN have instituted significant stability in the economy, the consequences continue to bite the citizens, households and businesses. There is widespread inflation that has eroded the earnings of the people even when the rate has dropped to 15.69 percent as of April 2026, from the peak of 34.80 in December 2024.
However, these gains have come with significant challenges. The sharp decline in the naira’s value has contributed to rising inflation, increasing the cost of imported goods, raw materials, fuel, and essential services. Many businesses have struggled with higher operating costs, while households have faced a decline in purchasing power as wages have failed to keep pace with rising prices. The pressure on living standards has sparked debates about whether the long-term benefits of the policy outweigh its short-term economic and social costs.
Three years after Nigeria floated the Naira on June 14, 2023, the country’s manufacturing sector remains one of the clearest gauges of the policy’s far-reaching consequences. Introduced as part of broader economic reforms aimed at improving foreign exchange liquidity and attracting investment, the move ended years of exchange-rate controls and exposed manufacturers to market-driven currency pricing. The result has been a period of painful adjustment marked by job losses, factory downsizing, balance-sheet shocks and shrinking access to credit, even as some firms have begun to emerge stronger through local sourcing and operational restructuring.
The Manufacturers Association of Nigeria (MAN) estimates that more than 18,900 manufacturing jobs were lost during the period as companies grappled with surging production costs, foreign exchange volatility, weak consumer demand and rising borrowing costs.
The impact extended beyond employment. Manufacturers also struggled with declining sales volumes as inflation eroded household purchasing power. The consequence was a build-up of unsold inventory estimated at N1.04 trillion, one of the largest stock overhangs recorded by the sector in recent years.
It also impacted on national debt and servicing as the higher exchange rate reflected the country’s debt-to-GDP ratio amid high debt servicing costs Nigeria’s public debt jumped from N97.34 trillion in 2023 to N159.28 in 2026.
Three years on, the devaluation of the naira remains one of the most consequential economic decisions in recent Nigerian history. The key question is: have the gains justified the challenges, and what lessons can policymakers draw from the experience so far?
Experts’ perspective
Prof. Hogan Ekpo, Director-General, West African Institute for Finance and Economic Management (WAIFEM), Lagos, said Nigeria is implementing a kind of managed float.
“The current forex system is relatively stable but the questions to ask are at what level and in whose interest? The current level is too high for our economy and does not make our exports to be ‘cheap’. Exporters of non-oil goods and services are experiencing high costs of transaction.
“For consumers the high level of forex also raises the rate of inflation which erodes the purchasing power of economic agents. It is production and export of non-oil goods and services that will bring about the appropriate exchange rate regime and inflow of reserves. Heavy dependence on export of crude oil is unhealthy for the economy. The revenue from crude oil is exogenous — we have no control of both the price and output hence we should downplay its importance in the forex metrics,” Ekpo said in a note to THEWILL.
Nigeria’s currency may be performing better than many expected, but leading economist Bismarck Rewane believes the naira is still trading below its true value. Speaking at the Lagos Business School Breakfast Session recently, the Managing Director and Chief Executive Officer of Financial Derivatives Company (FDC) revealed that the naira remains undervalued by more than 13 percent despite sweeping foreign exchange reforms and recent improvements in market stability.
According to Rewane, an analysis based on Purchasing Power Parity (PPP) indicates that the naira should be trading closer to N1,193.22 per dollar rather than the current Nigerian Foreign Exchange Market (NFEM) rate of N1,374.92. The findings suggest that while the currency has faced significant pressure in recent years, it is now trading below its estimated fair value. The assessment was based on a comparison of prices of consumer goods and services in Nigeria against international benchmarks, covering products ranging from food and beverages to electronics, transportation, and household items.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
