Market News

Nigeria’s foreign exchange (FX) market having undergone a dramatic transformation under the current leadership of the Central Bank of Nigeria (CBN), is capturing the attention of global investors and financial institutions, as showcased during the CBN high-profile presentation at Nasdaq MarketSite in New York on April 17, 2025.

The CBN’s reform agenda, spearheaded by Governor Olayemi Cardoso, has produced remarkable results in the forex sector, with market liquidity surging from a mere $120 million daily to an impressive $500-600 million. Perhaps more significantly, the premium between the Bureau de Change segment and the official market has narrowed to less than 2 percent, signalling unprecedented market efficiency.

“This is the most market-determined exchange rate Nigeria has had in its post-independence history,” remarked Razia Khan of Standard Chartered during the event’s panel discussion, underscoring the historic nature of these reforms.

The transformation of Nigeria’s forex landscape has fundamentally altered how international investors view the country. Jason Rekate of Citi described the ability to “repatriate profits and dividends when they want to” as “a complete game changer for the way the country is viewed.”

This sentiment was echoed by Ahmad Zuaiter of Jadara Capital Partners, who observed: “Just two years ago, Nigeria was the biggest empty room in Emerging Markets. That’s changed.” This dramatic shift in perception speaks volumes about the effectiveness of the CBN’s reform agenda.

Deputy Governor Muhammad Sani Abdullahi highlighted the reform’s philosophical underpinnings during his presentation, noting that “the FX subsidy had made the Naira uncompetitive, had led to an overvalued exchange rate, and had really made it very difficult to drive investment and to drive export.”

The CBN’s market-driven approach has not only stabilised the Naira but has created a more transparent and predictable environment for international business operations. Global corporations no longer face the uncertainty that previously characterized Nigeria’s forex market, removing a significant barrier to investment.

The forex reforms represent part of a broader strategy that includes removal of fuel subsidies and enhanced monetary policy transmission mechanisms. This comprehensive approach has earned Nigeria a Fitch rating upgrade, further validating the direction of the CBN’s policies.

Looking ahead, the sustained improvement in forex market fundamentals is expected to continue driving foreign direct investment into key sectors including energy, financial services, and technology. With increased market confidence and liquidity, Nigeria is positioning itself as a premier investment destination in Africa.

The transformation of Nigeria’s forex market from a point of concern to a point of strength demonstrates the power of strategic policy reforms when implemented with clarity and consistency. As global investors increasingly turn their attention to Nigeria, the country’s forex success story may serve as a template for other emerging markets facing similar challenges.