CBN Governor Says Inflation Is Falling, FX Market Stabilising In Nigeria

Nigeria’s economic climate is showing clear signs of recovery, according to the Governor of the Central Bank of Nigeria, Olayemi Cardoso, who says the country has entered a more stable phase following two years of sweeping monetary reforms.

Cardoso addressed bankers and financial leaders in Lagos during the 60th Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria, where he declared that Nigeria has “turned a decisive corner” in its reform journey.

He said the combination of easing inflation, a steadier foreign exchange market, and stronger investor confidence points to an economy regaining balance.

According to the Governor, the Bank’s embrace of orthodox monetary policy and firmer regulatory oversight is gradually correcting distortions that have long weighed on the economy.

Inflation, once running at 34.6 per cent in November 2024, dropped to 16.05 per cent by October 2025. Food inflation has also retreated to 13.12 per cent after hovering close to 22 per cent earlier in the year. Cardoso said the CBN will continue adjusting policy instruments with a view to guiding inflation towards single-digit levels.

A major part of his review focused on developments in the foreign exchange market. Cardoso confirmed that the CBN has fully settled the multi-billion-dollar FX backlog inherited by the present administration, a sum previously estimated at more than seven billion dollars. He noted that clearing the arrears has restored confidence among foreign airlines, manufacturers, and portfolio investors.

He attributed the return of stability to reforms such as the unification of exchange rates, the introduction of the Electronic Foreign Exchange Management System, and the Nigerian FX Market Conduct Code.

Cardoso said these measures have reduced opacity, discouraged arbitrage, and allowed the naira to trade within a tighter band. The difference between official and parallel market rates has now fallen below 2 per cent, a striking improvement from the period when it widened past 60 per cent.

Improved stability has also encouraged investor inflows, which reached 20.98 billion dollars in the first ten months of 2025, representing a 70 per cent jump compared to the whole of 2024.

Cardoso highlighted a rebound in Nigeria’s external reserves, which now stand at 46.7 billion dollars, the highest level in almost seven years, with more than ten months of import cover. He stressed that reserves are rising through stronger FX liquidity, non-oil exports, and increased diaspora remittances rather than fresh borrowing.

On the state of the financial system, he said the recapitalisation of banks is progressing well. Twenty-seven banks have already raised new funds, while sixteen institutions have met or surpassed the new capital thresholds ahead of the 31 March 2026 deadline.

Stress tests carried out this year, he added, confirm that the financial system remains broadly healthy. The Bank has also strengthened oversight of ATMs and POS agents, revised rules for branch closures, and completed a full review of the cash distribution network.

Cardoso described Nigeria’s removal from the Financial Action Task Force grey list as a notable achievement. He explained that countries on the list often face a fall in capital inflows of up to 7.6 per cent in the first year. Nigeria’s exit, he said, has eased compliance pressure on correspondent banks and boosted global confidence in the country’s financial conduct.

He also drew attention to rapid growth in digital payments and the fintech sector. More than 12 million contactless cards have been issued, the regulatory sandbox now hosts over 40 innovators, and interoperability across switching companies has deepened. Cardoso said the CBN will continue to support innovation, though always within a framework that safeguards consumers and financial stability.

The Governor noted that global rating agencies have begun to acknowledge Nigeria’s reform progress. Fitch recently upgraded Nigeria from B- to B with a stable outlook, Moody’s moved the country from Caa1 to B3, and S&P shifted the outlook from stable to positive.

Looking to 2026, Cardoso outlined key priorities that include strengthening banks’ resilience, improving price stability through a refined inflation-targeting framework, expanding the digital payments network, enhancing oversight of fintech operators, modernising internal CBN processes, and building stronger partnerships at home and abroad.

He ended his address with optimism, saying Nigeria is now better positioned to weather external shocks, supported by a flexible exchange-rate regime, rising non-oil exports, a growing services sector, and firmer reserves.

Source: Naijanews