The positive rally of the local currency against the dollar continued yesterday with the naira exchanging at N1,455 to one dollar even as forex speculation declined, at an all-time low as the gap between the official and parallel market rates has significantly dropped.

The naira, which has sustained rally across markets in recent months, trading at N1,455/$ as of yesterday according to the Nigeria Foreign Exchange Market (NFEM) and N1,460 to N1,470/$ at the unofficial black market.

The naira is making its strongest gain in the year with the improvement attributed to surge in foreign reserves to $43.05 billion and drop in speculative FX activities as the impact of the Central Bank of Nigeria (CBN’s) reforms continue to drive positive sentiments and confidence across markets, according to analysts.

A country’s currency is an instrument of her pride. For the Nigeria naira, a turbulent past that saw it lose its significant value is almost over, according to analysts.

The local currency rebound is being driven by a combination of stronger demand for the naira, reduced speculative trading, and rising foreign reserves now at $43.05 billion.

Besides, the forex reforms instituted by the CBN Olayemi Cardoso are now yielding great benefits from reduction in forex speculation and narrowing of gaps between official and parallel markets.

The CBN leadership has continued to take major steps to keep the naira stable in line with its exchange rate stability objective.

The apex bank is boosting FX supply to retail end users, reducing distortions in the market and maintaining effective foreign reserves management and accretions.

The injection of liquidity into the market and rising compliance with FX regulations have reduced sharp depreciation of the naira at official and parallel markets and buoyed foreign investors’ interest in the domestic economy.

The naira stability is also driven by inflows from Foreign Portfolio Investors (FPIs), substantial contributions from International Oil Companies (IOCs), and the CBN’s interventions to authorised dealers.

There is also renewed interest of Foreign Portfolio Investors (FPIs) in the FX market—driven by improved market confidence, a more efficient FX framework, and strengthening macroeconomic conditions.

The CBN chief Cardoso recently announced that gross external reserves remained robust at $43.05 billion on September 11, 2025, compared with $40.51 billion at end-July 2025 with an import cover of 8.28 months.

“Similarly, the second quarter 2025 current account balance recorded a significant surplus of $5.28 billion compared with $2.85 billion in the first quarter of 2025,” Cardoso stated during the 302nd monetary policy committee meeting held in Abuja last week.

FX speculations drop

A Bureaux De Change (BDC) trader based in Marina, central Lagos, Garuba Sarki, said many dealers lost huge funds as they sold below purchase rates as exchange rate gap narrowed.

“I know some BDC operators that sold dollars below the purchasing rate. This is expected to continue in the weeks ahead. Also, the expected dollar inflows to the economy will help strengthen the naira position against the dollar,” he said.

Analysts at Commercio Partners attributed the rally and gradual narrowing of the exchange rate gap to a combination of stronger demand for the naira, reduced speculative trading, and improved foreign reserves.

Head of Research at Commercio Partners, Ifeanyi Ubah, expressed optimism that the positive sentiment would be sustained in the near term, supported by increasing external buffers.

“Nigeria’s rising external reserves are reflecting a healthier external position for the country. With reserves strengthening, speculative activity subsiding, and oil earnings supporting inflows, many market watchers believe the naira’s current rally has a stronger foundation compared to previous cycles of volatility,” he said.

Call for caution

However, other experts caution that sustaining this momentum will depend on the government’s ability to maintain macroeconomic discipline, boost crude oil production, and diversify export earnings.

President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said key policies like the Foreign Exchange (FX) Code, rising investors’ confidence, and foreign direct investment supporting policies are effectively putting FX speculators in check.

He said the FX Code implementation is comprehensively addressing various aspects of market conduct and practices.

The policy authorises the CBN to establish and enforce directives regarding the standards for financial institutions under which FX deals are to be conducted.

Gwadabe said the code further entrenches transparency and accountability in the FX market, and continually sustains naira stability and rally.

He also backed CBN’s position that all institutions engaged in the foreign exchange market must also provide the CBN with a detailed implementation plan outlining how they intend to achieve full compliance with the FX Code.

Cardoso had at the launch of the Nigeria Foreign Exchange Code (FX Code), emphasised integrity, fairness, transparency, and efficiency as critical pillars for driving Nigeria’s economic growth and stability.

According to Cardoso, “The FX Code represents a decisive step forward, setting clear and enforceable standards for ethical conduct, transparency, and good governance in our foreign exchange market. The era of opaque practices is over. The FX Code marks a new era of compliance and accountability. Under the CBN Act 2007 and BOFIA Act 2020, violations will be met with penalties and administrative actions.”

Gwadabe, said the policy shifts showed the level of creativity, policy and hard work the Cardoso puts in ensuring that more forex flows into the economy and remain accessible to businesses.

Boosting remittances inflows

As part of its efforts to boost diaspora remittances and support naira stability, the CBN recently announced the introduction of two new financial products designed to serve Nigerians living abroad.

The Non-Resident Nigerian Ordinary Account and the Non-Resident Nigerian Investment Account was created to streamline remittances, encourage investments, and foster financial inclusion among Nigerians in the diaspora.

It said, “The Central Bank of Nigeria is pleased to inform the general public of the introduction of the Non-Resident Nigerian Ordinary Account and Non-Resident Nigerian Investment Account targeted at Nigerians in diaspora.”

The Non-Resident Nigerian Ordinary Account was designed to facilitate remittances by allowing non-resident Nigerians to remit foreign earnings into Nigeria and manage funds in foreign currency or naira.

Deposits from sources such as salaries, allowances, and dividends are supported, alongside spending on family maintenance, education, and healthcare.

On the other hand, the Non-Resident Nigerian Investment Account provides an opportunity for NRNs to invest in Nigeria’s financial markets, including foreign currency-denominated bonds, fixed deposits, and local assets like equities, government securities, and mortgage products.

The CBN explained that both accounts offer currency flexibility, enabling holders to maintain balances in either foreign currency or naira.

Account holders will also be able to convert funds between the two currencies at prevailing exchange rates through authorised dealers.

The CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.

The remittances in the economy are expected to increase based on CBN’s ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth.

In a report: “Diaspora remittances: The power behind Africa’s sustainable growth”, Regional Vice President of Africa at Western Union, Mohamed Touhami el Ouazzani, said remittances may be measured through the movement of money, but their real impact is measured in lives changed.

He disclosed that in 2023 alone, $90 billion flowed into Africa from its global diaspora, an amount that rivals the Gross Domestic Product of the entire region.

He said that remittances symbolize deep ties that keep communities connected across borders. “Families with a breadwinner working abroad depend on these funds to provide vital support for day-to-day needs. They also build the foundation for broader financial stability,” he said.

For remittances to be truly transformational, it begins with understanding and meeting people’s aspirations. Ensuring individuals who strive for more can send and receive funds, regardless of their financial status, is crucial. We must cater to diverse needs.

“In a continent renowned for its entrepreneurial spirit, offering multiple channels for remittance access is key. Whether through bank accounts, digital wallets, mobile money apps, or cash pickups, this flexibility ensures that funds are delivered in ways that best suit local realities. Providing innovative and inclusive solutions empowers individuals to not only manage their immediate needs but also to invest in long-term growth opportunities,” he added.

According to him, every remittance is a seed of change – a deliberate investment in a future where borders blur.

“The future of remittances in Africa transcends mere financial support. By strategically directing funds into sectors that need them most, Africa’s diaspora is not just sending money home; they are building resilient economies and challenging traditional models of progress,” he said. (Weekend Trust)

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