Cardoso
By Iyunade Grace
The Central Bank of Nigeria’s Governor, Olayemi Cardoso, announced that the foreign‑exchange market is now turning over about $500 million each day, even when the CBN is not actively buying or selling. Speaking after the 303rd Monetary Policy Committee meeting, Cardoso said the figure reflects a “significant improvement” in liquidity and price discovery, a far cry from the thin trading that characterised the market just a few months ago.
He attributed the surge to the recent overhaul of the FX framework, particularly the introduction of the Electronic Foreign‑Exchange Matching System (EFEMS) and the shift toward a “willing‑buyer, willing‑seller” regime. By allowing banks and licensed dealers to match trades electronically, the platform has reduced transaction costs and eliminated the wide spreads that once plagued the market.
Cardoso highlighted that the spread between the official rate and the parallel market has collapsed from roughly 60 % to about 2 %. This narrowing indicates that the market is now pricing the naira more realistically, with supply and demand playing a larger role than central‑bank intervention, which now accounts for less than 10 % of daily turnover.
The governor also noted that the reforms have helped attract foreign portfolio inflows, which reached a two‑year high of $2.06 billion earlier this year. Investors appear more confident that the exchange rate will be determined by market forces rather than administrative fixes, a shift that should support broader economic stability.
However, Cardoso warned that the CBN remains vigilant and will intervene only to curb excessive volatility or address “disorderly market conditions.” He stressed that the central bank’s role is now more about oversight and ensuring the integrity of the system rather than direct participation in daily trading.
Looking ahead, the governor said the bank will continue to monitor the market’s evolution and may introduce further refinements to deepen liquidity. If the current trajectory holds, Nigeria could see a more resilient FX market that serves both domestic traders and international investors, ultimately strengthening the naira and the overall economy.
