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Market Transparency and Policy Adjustments Ease FX Volatility
The Central Bank of Nigeria (CBN) has made significant strides in stabilizing the foreign exchange market through policy corrections, market liberalization, and enhanced transparency, according to Zeal Akaraiwe, CEO of Graeme Blaque.
Speaking on Arise News’ Global Business Report, Akaraiwe credited these measures with narrowing the gap between the official and parallel exchange rates.
As of February 25, 2025, the naira has stabilized around N1,500/$ in both markets, marking a rare convergence. Akaraiwe emphasized that the CBN’s proactive approach, particularly through regulatory circulars and reforms like the introduction of Bloomberg’s BMatch system in interbank FX trading, played a key role in addressing market distortions.
“The influx of circulars in early 2024 was necessary to correct past missteps. When transparency improved in December with the launch of BMatch, we saw the naira appreciate by 10% almost immediately,” he said.
CBN Not Defending the Naira
Contrary to some expert opinions, Akaraiwe argued that the CBN is not actively defending the naira. He pointed out that in 2024, the central bank’s net contribution to the FX market was just 3%, a drastic reduction from the 70-80% levels recorded in previous years.
“Selling FX is part of the central bank’s normal operations. What’s changed is that the market is now driving itself, with the CBN playing a much smaller role in direct intervention,” he explained.
With improved policy direction and a shift toward market-driven FX management, the CBN’s strategy appears to be fostering greater stability and confidence in the naira.
