Nigeria Extends Dollar Access as Naira Shows Ongoing Stability

The Central Bank of Nigeria (CBN) has been actively working to extend dollar access and maintain the naira's stability in the foreign exchange market. The CBN's interventions, coupled with improved reserves, reduced import dependency, and increased inflows from remittances and foreign direct investments (FDIs), have contributed to the naira's ongoing stability.



CBN Governor Olayemi Cardoso, who assumed office about fifteen months ago, has been instrumental in implementing measures to stabilize the naira. Upon taking office, Cardoso met the naira in its worst state after the Federal Government removed petrol subsidy and floated the naira. Since then, the CBN has introduced a new forex platform, which has injected much-needed transparency into currency transactions, calming market jitters and reducing speculative activities (Source: Nairalytics).

The CBN's active participation in the foreign exchange market has also played a significant role in maintaining the naira's stability. By adding liquidity to the system, the CBN has helped the market align with fundamentals, contributing to the naira's recent stability (Source: Cyril Amaka, economist). The naira has been hovering between N1450 and N1500 at the foreign exchange market during the last two months, indicating improved stability (Source: Daily Independent).

Improved reserves, reduced import dependency, and increased inflows from remittances and FDIs have all played crucial roles in stabilizing the naira. Nigeria's foreign exchange reserves have climbed closer to $41 billion, thanks to a mix of foreign debt inflows and higher crude oil prices (Source: Nairametrics). The gradual ramp-up of domestic refinery operations is set to slash Nigeria's reliance on imported petroleum products, reducing forex demand significantly (Source: Nairametrics). Forex remittances had already risen to $600 million monthly by June 2024, and policies like the non-resident BVN initiative are expected to drive this number even higher (Source: Nairametrics).



In conclusion, the CBN's active participation in the foreign exchange market, coupled with improved reserves, reduced import dependency, and increased inflows from remittances and FDIs, has contributed to the naira's ongoing stability. As the economy continues to grow and develop, the CBN's role in the foreign exchange market is likely to evolve, with a focus on maintaining the naira's stability and supporting economic growth. Investors should stay informed about these developments and conduct thorough due diligence before making investment decisions in the Nigerian market.