Investors who relied on dollar funds to hedge against inflation and naira-induced losses missed their targets this year. The weaker naira, which for years had incentivized a rush into dollar funds, appreciated instead. Many investors who entered the dollar fund market at N1,655/$1 at the beginning of the year are now losing at least N165/$1 due to the exchange-rate differential, with the naira trading at N1,490/$1. Meanwhile, high inflation—a key driver for dollar fund demand—also eased sharply, falling from 34.60 per cent in November 2024 to 14.50 per cent in November 2025. The biggest beneficiaries have been naira-denominated assets, strengthened by a firmer local currency and lower inflation. As a result, savvy investors are now exiting dollar funds in favour of naira assets to maximize yields and protect their wealth from value erosion, writes Assistant Editor COLLINS NWEZE
Investors are always in search of higher-yielding assets capable of delivering their target returns. Yet, such assets are rarely free of risk and uncertainty. Stanley Ben-Okoafor, a Nigerian investor based in the Netherlands, understood this reality well. For years, he adhered strictly to a diversified investment strategy, mindful of the age-old principle—often the first lesson taught to novice investors—that one should never put all their eggs in one basket.
However, in January this year, the lure of higher yields led him to abandon that long-standing discipline. Seeking better returns, Ben-Okoafor instructed his banks to liquidate his naira-denominated investments, including savings and fixed deposits, and convert the proceeds into dollars. His equity holdings were also sold, with the proceeds similarly converted. In total, he committed $100,000 to dollar investments at an exchange rate of N1,655 to the dollar.
While the investment yielded a return of 7.5 per cent in dollar terms, much of that gain was eroded by movements in the foreign-exchange market, particularly the strengthening of the naira. “The naira’s appreciation to N1,490/$1 at my exit point meant I lost N165 on every dollar,” he explained. “That significantly reduced my take-home return from the investment.”
At present, the naira trades at around N1,490/$1 in the parallel market and N1,460/$1 at the official window, creating a premium of N30/$1. Many dollar investors, including Ben-Okoafor, typically exit at the parallel market rate. The currency’s recent appreciation has been attributed to increased foreign-exchange inflows and improved transparency in the FX market.
Ben-Okoafor’s experience mirrors that of millions of Nigerians who shifted funds from naira assets into dollar-denominated investments this year, only to see the value of their portfolios eroded. The sharp naira depreciation that previously justified such strategies failed to materialise. Instead, the currency posted notable gains at both the official and parallel markets, alongside a marked slowdown in inflation. Predictably, this triggered a wave of portfolio realignments in Nigeria’s investment landscape. Savvy investors began divesting from dollar funds—which had once dominated as high-yield instruments—and reallocating capital into naira assets, now emerging as the preferred choice.
Michael Steven-Aku, one of the investors who recently switched from dollar funds back to naira-denominated assets, offered insights into the forces reshaping the market. “After eight consecutive months decline in inflation rate to 14.45 per cent in November 2025, according to the latest Consumer Price Index report from the National Bureau of Statistics (NBS), the naira has stabilised and the appeal of holding dollar as a hedge by investors also reduced. With naira trading at N1,490/$1, investors are moving away from dollar hoarding and back into naira-denominated investments to avoid currency fluctuation risks,” he explained.
Likewise, Obiageli Maduka, a Lagos-based entrepreneur and avid investor in dollar funds, said she recently had a rethink. According to her, dollar-denominated assets no longer provide the level of protection they once did against inflation-induced capital erosion. “I lost interest in investing in dollar funds. In January 2025, I invested $50,000 in dollar funds at the exchange rate of N1,655/$. Today, the naira exchanges at N1,490/$ and large part of the 7.5 per cent yield was wiped out by negative N165/$1 exchange rate differential,” she disclosed.
Maduka explained that her friends that made similar investments in naira-based Money Market Fund had a better deal. “A close friend of mine invested N60 million in Money Market Fund and has constantly earned above 19 per cent monthly yield or over N1 million monthly returns on investment,” she said.
Maurice Stevenson, an Abuja-based investment banker, explained that the investment climate in 2025 was extremely difficult for dollar fund investors because of significant naira rebound and drop in inflation figures. “These two developments meant that unlike in the previous years when dollar fund investors earned interest on their funds, and still earned extra from positive exchange rate differential due to weaker naira, they had to contend with a stronger naira and negative exchange rate differential at the exit point this year,” he said.
In practical terms, the inflation rate dropping from 34.60 per cent in November 2024 to 14.50 per cent in November 2025 means that the prices of goods and services dropped by 19.5 per cent between November 2024 and November 2025. That means a bag of onions that cost N100,000 in November 2022 dropped by N20,100 in November 2025 to cost N79,900.
Findings showed that when the supply of goods and services outpaces demand, buyers become unwilling to pay higher prices, resulting in a decline in prices. Similarly, a contraction in money supply, especially when not matched by an increase in output or productivity in the economy, can also exert downward pressure on prices. As inflation eases, millions of Nigerians who invested in high-yield interest funds have seen their wealth grow in real terms. With their funds gradually gaining value, these investors are better positioned to meet their daily financial obligations.
Investors show interest in equities
High returns in equities also reignited investor interest in naira-denominated assets. Despite a tight monetary policy environment, Nigeria’s equity market delivered substantial wealth to investors this year. From index heavyweights and old-economy stocks to turnaround plays and previously overlooked names, the market offered bountiful yields across a broad spectrum of listed companies.
By December 22, 2025, no fewer than 40 companies listed on the Nigerian Exchange Limited (NGX) had returned over 100 per cent to investors—an outcome that sharply contrasted with the cautious sentiment that prevailed at the start of the year. Although the NGX All-Share Index (ASI) recorded a strong year-to-date gain of 48.12 per cent, the scale of outperformance by select stocks underscored how exceptional equity returns were in 2025.
Some individual performances were particularly striking. NCR Nigeria posted a staggering 1,354 per cent rally, redefining what was possible on the local bourse within a single calendar year. Beta Glass advanced by 470.11 per cent, Mutual Benefits Assurance rose 408.20 per cent, Champion Breweries gained 339.63 per cent, while Eunisell Interlinked climbed 315.15 per cent, among others.
Several investors who participated in the rally shared their experiences. Kingsley Nwadike, an entrepreneur, said he moved funds from his savings deposit account into the equities market—a decision that paid off handsomely. “I had kept my funds in a savings account for decades because of the ease of access,” he said. “But the interest earned could not even beat inflation. I decided to move my funds into equities, where I earned a 28 per cent year-to-date return.”
Another investor, Akpan Okon, said he is better off than those who left their funds in savings accounts and bore the brunt of inflation. “Even now, there are pockets of value in the equity market worth exploiting,” he noted. “Several listed companies have long-term internal returns on equity that point to positive total returns over time.”
Commenting on the broader market dynamics, Managing Director of Afrinvest West Africa Limited, Ike Chioke, said improved currency stability, stronger-than-expected corporate earnings and consistent dividend payments encouraged investors to rotate back into equities, particularly stocks trading below their intrinsic value. He added that overall market participation strengthened steadily throughout the year, with sustained bullish sentiment occasionally interrupted by profit-taking. According to him, reform-driven developments, policy implementation and rising investor awareness collectively drove higher trading volumes across the market.
Understanding dollar investments
Investor interest in dollar funds surged after the Central Bank of Nigeria (CBN) liberalised dollar investments through a new foreign-exchange policy that allows investors to transfer dollar cash deposits from one domiciliary account to another. Under the policy, daily transfers are capped at $10,000. Previously, dollar-denominated investments were largely restricted to individuals with offshore dollar inflows, effectively limiting participation to a narrow segment of investors. The policy shift broadened access, enabling more Nigerians to invest in dollar assets using funds held in their domiciliary accounts.
Several asset managers and investment banks now facilitate dollar funds and fixed-income investments. Notable among them are Chapel Hill Denham Advisory Limited, FCMB Capital Markets Limited, Stanbic IBTC Asset Management Limited, Vetiva Advisory Services Limited, Coronation Merchant Bank Limited, Meristem Capital Limited and Afrinvest Asset Management Limited.
Afrinvest Asset Management Limited, for instance, introduced an open-ended mutual dollar fund offering returns of about 10 per cent per annum. The fund delivers significantly higher returns compared to funds kept in domiciliary accounts in Nigeria or current accounts in Europe and the United States. The Afrinvest Dollar Fund was designed to support income generation, capital preservation and portfolio diversification over the short to medium term. It targets superior returns and pays dividends twice yearly. Investors can participate with a minimum investment of $1,000.
Similarly, Stanbic IBTC Asset Management launched the Stanbic IBTC Dollar Fund to provide currency diversification, income generation and stable growth in U.S. dollars. In a note to investors, the firm said the fund will allocate a minimum of 70 per cent of its portfolio to high-quality Eurobonds, up to 25 per cent to short-term U.S. dollar deposits, and a maximum of 10 per cent to U.S. dollar-denominated equities approved and registered by the Securities and Exchange Commission of Nigeria. The fund manager advised that investors must transfer a minimum of $1,000 for the initial investment and at least $500 for subsequent top-ups, either through the bank’s mobile application or by visiting a bank branch to initiate the transfer. “When you fund your investment, you can earn extra money by referring friends and family. You can also add to your investment over time and withdraw at your convenience. If you have questions or need assistance, please reach out. We are here to help you get started,” the company said.
The fund also promised competitive dollar returns, controlled risk exposure and seamless access to funds through its Super Apps. It reiterated that investors could hedge against inflation by earning in dollars, noting that the new foreign-exchange guidelines permit the transfer of dollar cash deposits between domiciliary accounts, subject to a daily limit of $10,000.
An investment analyst and Chief Executive Officer of Nairametrics Financial Advocates Limited, Ugochukwu Obi-Chukwu, explained that dollarisation largely stems from fear that inflation will continue to erode the value of the naira. According to him, many investors overlook the fact that sustained demand for dollars contributes to exchange-rate depreciation. “There is a sense of urgency that even the government shares. The government itself dollarises. When public assets are privatised, they are sold in dollars. At the seaports, fees are also denominated or converted in dollars. Government machinery is essentially dollarised, and other segments of the economy simply follow,” he said.
Meanwhile, Chief Business Officer of Countryside Investment Limited, Michael Akpan, highlighted the risks associated with keeping idle funds. While encouraging Nigerians to invest rather than leave money dormant, Akpan noted that one of the harsh realities of inflation spikes is the steady erosion of purchasing power.
“Even if interest or the return you are getting on your investment is below inflation rate, doing nothing will make you worse off. By investing in equities, money market, treasury bills or dollar funds, you are likely to reduce the impact of inflation on your funds,” he stated.
Akpan explained that even where inflation is running far ahead of returns, that should not deter investors’ commitment. “Assuming you earn between 10 to 20 per cent returns, it means you have been able to cut down your actual cost of living by at least 10 per cent. In real terms, your exposure to inflation is moderated by the extra income from investing, which is better than just taking inflation 100 per cent,” he said.
He added, “The options available are equity investment, treasury bills/commercial papers, federal government bonds/corporate bonds, federal government savings bond and dollar funds. Equity investment is the buying and selling of stocks listed on the Nigerian Exchange and NASD OTC market. Treasury bills are issued by the CBN on behalf of the federal government; commercial papers are issued by corporate bodies to meet short term obligations. The federal government of Nigeria bonds/corporate bonds are issued by the federal government and corporate bodies, respectively, to meet capital projects.”
Views from other stakeholders
CBN Governor, Olayemi Cardoso, said that despite persistent geopolitical tensions, supply-chain realignments, rising protectionism and other global headwinds, a softer U.S. dollar and easing global inflation present clear advantages for Nigeria and other emerging markets. According to him, many African currencies that were previously under intense pressure are now beginning to stabilise. He noted that with improved economic management and the implementation of domestic reforms, Sub-Saharan Africa is projected to record growth of 3.8 per cent in 2025 and 4.4 per cent in 2026, according to World Bank estimates. “Nigeria, Ethiopia and Côte d’Ivoire are leading this continental recovery, demonstrating the impact of decisive reforms, credible institutions and focused policy direction,” Cardoso said. “This type of resilience is never automatic; it is the outcome of difficult, disciplined choices—choices we too have had to make.”
The CBN governor added that the significant and steady decline in inflation is helping to restore real purchasing power for households and businesses. He said the trend also underscores disciplined policy execution and signals Nigeria’s return to orthodox monetary policy management. “We continue with determination to bring inflation down further. The current double-digit rate cannot be acceptable. Price stability is the foundation of sustainable growth. Our transition to an inflation targeting framework is gaining traction. We have improved data analytics, strengthened communication, and ended monetary financing of fiscal deficits. These actions have strengthened monetary policy transmission and anchored expectations,” he said. Cardoso also emphasised that a functional, transparent and liquid fixed-income market is critical for effective monetary policy transmission and the mobilisation of long-term domestic savings.
Echoing this view, a member of the CBN-led Monetary Policy Committee, Aloysius Ordu, said the naira has demonstrated relative stability, largely due to the CBN’s implementation of market-reflective exchange-rate policies. “These measures have helped narrow the gap between official and parallel market rates, enhanced investor confidence and promoted transparency in the foreign-exchange market,” he said. “The CBN’s continued efforts to strengthen market liquidity and maintain exchange-rate stability are essential to sustaining external sector resilience.”
President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, attributed recent naira stability to a surge in foreign portfolio investment (FPI) inflows and the rise in external reserves to about $45.23 billion as of late December 2025. He further noted that the deployment of the Electronic Foreign Exchange Management System (EFEMS), powered by Bloomberg BMatch, has transformed FX trading by enforcing mandatory order submission, enabling real-time regulatory visibility and improving price discovery.
Meanwhile, the International Monetary Fund (IMF) cautioned that dollarisation of the economy could be difficult to reverse. As a partially dollarised economy, Nigeria operates with a dollar bias in international trade, financial invoicing and, more recently, as a store of value. In its report titled Digital Money and Central Bank Balance Sheets, the IMF warned that once an economy becomes accustomed to a bi-monetary system, reversal is challenging—even after the original triggers, such as high inflation and exchange-rate volatility, have been addressed. “The optimal choice between domestic currency and the dollar depends on the monetary framework and the relative benefits each offers as they coexist,” the IMF noted.
The IMF further explained that in highly dollarised economies like Nigeria, exchange rates are extensively used for price indexation, resulting in high real dollarisation and near-complete pass-through from currency depreciation to inflation. For many stakeholders, this underscores the need to assess investment decisions not only in terms of nominal returns, but also with regard to capital safety and long-term wealth sustainability.
The Naira on Friday closed the week stronger with a gain of N1.65 against the U.S. dollar at the official market, after it traded at N1,454.41.
According to data released on the official website of the Central Bank of Nigeria, this represents a 0.11 per cent gain when compared to Thursday when it traded at N1,456.06.
The Naira, which opened the trading week with slight depreciation, experienced weeklong minimal losses trading at N1,455.38 on Wednesday.
On Monday and Tuesday, the local currency traded at N1,451.86 and N1,454.38 respectively.
The Naira closed the week slightly weaker on Friday, recording a loss of N2.60 against the United States dollar at the official foreign exchange market.
It settled at N1,450.42, according to figures released on the Central Bank of Nigeria’s official website, reflecting a mild but persistent downward drift.
The latest closing rate represents a 0.17 per cent depreciation when compared with Thursday’s level of N1,447.82, which itself showed limited pressure on market stability.
On Wednesday, the Naira exchanged at N1,447.64, marking a 0.1 per cent decline as demand for the dollar continued to outweigh available supply.
The currency had earlier traded at N1,445.39 on Tuesday, representing a 0.2 per cent loss when set beside Monday’s rate of N1,448.43 per dollar.
The News Agency of Nigeria (NAN) reports that the week’s movements highlight ongoing fragility in the official window, where modest fluctuations have become increasingly common in recent months.
Nigeria’s export sector showed promising growth in 2024, with total exports expressed in naira surging to N77.4 trillion, up from N36 trillion the previous year. While challenges remain in key international markets, the increase underscores the country’s resilience and potential to expand trade across Africa and beyond.
Data from the International Trade Centre (ITC) indicate that while dollar-denominated export earnings fell slightly to $57.9 billion from $60.65 billion in 2023, non-oil sectors are showing remarkable gains that could strengthen Nigeria’s global trade position over time.
Cocoa exports emerged as a standout performer, rising sharply to $2.6 billion in 2024 from $759 million in 2023. Ores and residues also recorded significant growth, climbing to $824.4 million, demonstrating Nigeria’s ability to diversify its export base beyond crude oil.
The country maintained strong intra-African trade performance, supported by the stability of the West African CFA franc. Companies such as Unilever Nigeria, Cadbury Nigeria, and Guinness Nigeria reported combined export sales of N22.8 billion in 2024, more than double the N9.92 billion recorded in 2023.
Analysts say this reflects growing competitiveness in regional markets.
Despite EU rejections of some agricultural and manufactured products due to quality and certification gaps, Nigeria has been making strides in aligning its export processes with global standards. The Federal Government’s Trade Policy of Nigeria (2023–2027) seeks to modernise inspection, certification, and compliance systems, boosting prospects for long-term acceptance in premium markets.
Oil continues to underpin export earnings, contributing nearly 90 per cent of total revenue between 2022 and 2024. Crude oil revenues, although slightly lower at $50.3 billion in 2024, remain a strong foundation for Nigeria’s overall export performance and provide critical foreign exchange inflows.
Analysts note that the sharp rise in naira-denominated export values, driven in part by currency depreciation, offers opportunities for local businesses to expand operations, invest in processing technology, and increase domestic value addition to boost competitiveness abroad.
Countries like South Africa, Morocco, and Kenya continue to provide benchmarks for high acceptance rates in EU markets, and Nigeria is gradually adopting best practices in supply chain management, laboratory accreditation, and quality assurance to close these gaps.
Non-oil export growth, rising regional trade, and government-backed policy reforms signal an emerging trajectory for Nigeria’s export sector. With targeted investments in processing, certification, and infrastructure, the country is well-positioned to convert naira gains into stronger dollar earnings over time.
As Nigeria navigates structural challenges, ongoing reforms and sectoral successes, stakeholders say, highlights the nation’s potential to diversify its export portfolio, strengthen regional trade, and eventually secure higher acceptance rates in high-value international markets, including the EU.
The Naira on Monday appreciated further at the official foreign exchange market, trading at N1,452.79 to the dollar.
Data from the Central Bank of Nigeria (CBN) showed the Naira gained N5.16 compared with Friday’s rate of N1,457.95.
This represents a 0.35 per cent appreciation, extending the weeklong positive trend recorded in the previous week.
The Association of Bureau De Change Operators of Nigeria (ABCON) commended the month-long appreciation of the Naira in both official and parallel markets.
ABCON President, Dr Aminu Gwadabe, told the News Agency of Nigeria (NAN) in Lagos that several factors contributed to the gains.
He listed them as Nigeria’s exit from the Financial Action Task Force (FATF) grey list, increased oil revenue, higher foreign reserves and diaspora remittances.
Gwadabe congratulated the nation for leaving the FATF grey list, noting that the Naira gained N10.00 against the dollar at the parallel market on Monday.
He said the development had boosted investors’ confidence and attracted more foreign investments into the country.
According to him, sustained reforms and information sharing among security agencies helped trace proceeds of crime and facilitated Nigeria’s exit from the list.
He added that the CBN’s success in raising foreign reserves to about 42.26 billion dollars provided a strong buffer for the Naira.
“The sustained stability has reduced speculation. Speculators’ activities have been rendered ineffective in the market,” he said.
Nigeria’s inflation rate recorded its biggest drop in recent period to 18.02 per cent in September as above average decline in prices of basic food items, a stable currency and improved costs of logistics sustained improvement in average cost of living.
The National Bureau of Statistics (NBS) yesterday released its latest Consumer Price Index (CPI) Report showing that headline inflation rate dropped by 210 basis points from 20.12 per cent in August 2025 to 18.02 per cent in September 2025. It was the sixth consecutive time since April 2025.
The decline in headline inflation rate was driven by broad improvements in prices, especially with substantial drop in prices of food items. Food inflation had dropped by 500 basis points from 21.87 per cent in August 2025 to 16.87 points in September 2025.
The decline in food inflation was attributed to decrease in the average prices of common food items like maize grains, garri, beans, millet, potatoes, onions, eggs, tomatoes and fresh pepper among others.
Core inflation- which measures all items excluding farm produce and energy, dropped by 80 basis points to 19.53 per cent in September 2025 as against 20.33 per cent in August 2025.
The continuing disinflation mirrored analysts’ consensus on the price outlook, with headline inflation expected to drop further in the months ahead.
The NBS attributed the disinflation to the crash in the cost of food, energy and transportation.
NBS stated: “The average annual rate of food inflation for the twelve months ending September 2025 over the previous twelve-month average was 24.06 per cent, which was 13.47 per cent points lower compared with the average annual rate of change recorded in September 2024 at 37.53 per cent”.
The NBS report outlined disparity in prices across the country with all-items inflation rate for September 2025 highest in Adamawa, 23.69 per cent; Katsina, 23.53 per cent; and Nasarawa, with 22.29 per cent while Anambra, 9.28 per cent; Niger, 11.79 per cent and Bauchi, with 12.36 per cent recorded the lowest headline inflation rates.
Economists and finance experts yesterday were unanimous that the continuing disinflation reflected the improvements in macroeconomic environment.
They however called for concerted fiscal policies to significantly expand the macroeconomic gains on the living conditions of the citizenry.
Experts expected the continuing disinflation to translate into further reduction in benchmark interest rate and stronger naira, potentially enhancing consumers’ purchasing power.
The NBS report came a day after the International Monetary Fund (IMF) raised Nigeria’s growth forecast to 3.9 per cent in 2025 and 4.1 per cent in 2026, citing improvements in the country’s macroeconomic outlook.
The IMF stated that the upgrade of its national growth projection for Nigeria was also based on favourable domestic situation.
Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the decline in inflation rate was “a significant indicator of improving macroeconomic conditions and policy traction”.
He however called for coordinated policies to improve average household purchasing power, consumer confidence, and real incomes.
“The gains achieved so far must therefore be consolidated through decisive and well-targeted policy actions,” Yusuf said.
According to him, the sustained disinflation trend is a welcome development and a sign of improving macroeconomic fundamentals, but government must do more to address fundamental basis of high cost of livings for low- and middle-income households.
He said: “The next phase of reform must therefore prioritize welfare-focused and cost-reduction measures that deliver tangible relief to citizens.
“Business confidence is rising, but consumer confidence remains fragile. Policies that enhance productivity, stabilise prices, and reduce the structural cost of doing business will not only strengthen the disinflation trajectory but also foster inclusive and sustainable economic recovery.
“With consistency, coordination, and structural reforms, Nigeria can achieve a stable single-digit inflation rate over the medium term — anchoring growth, improving welfare, and restoring confidence in the economy”.
He outlined that in order to consolidate the current gains and sustain the disinflation momentum, the government must enhance food security and agricultural productivity, reduce logistics and transport costs, address energy and production costs, expand access to affordable finance and deepen reforms in port and trade logistics.
Analysts at SCM Capital said disinflation trend reflected gains from economic reforms, foreign exchange (forex) rate stability and seasonal food supply dynamics.
“Inflation is projected to decline further in October 2025, supported by sustained forex stability, moderating input costs, and improved domestic supply conditions. The harvest season should further ease food prices, extending the disinflation trend.
“With inflation easing for six consecutive months, the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) may consider another rate cut to stimulate growth. Overall, price pressures are expected to remain subdued, sustaining the economy’s momentum”, SCM Capital stated.
Analysts at CardinalStone noted that the “moderating inflation bodes well for Nigeria’s currency valuation”.
Analysts pointed out that the decline in food inflation in September was atypical of the range in recent years, but was relatively common between 1996 and 2005, a period marked by greater food security.
Analysts said the magnitude of the current month-on-month decline was larger than the historical average of 0.65 per cent observed during those earlier periods.
“This outsized food inflation decline may have been partly prompted by the recent material drop in market food prices and easing security concerns,” CardinalStone stated.
According to analysts, the ongoing disinflationary trends bode well for currency valuation with the combination of a sustained current account surplus and a steady build-up in forex reserves expected to underpin further naira appreciation.
CardinalStone projected that naira would close the year within the range of N1,400 and N1,450 per dollar.
“The softer inflation outlook reinforces the case for additional monetary easing by the CBN at its November policy meeting. We expect a 100 basis points reduction in Monetary Policy Rate (MPR) to 26.0 per cent.
“Lower inflation and an expected policy rate cut are likely to drive further yield compression across the naira credit market. While the curve may remain inverted, we expect a sharper adjustment at the short end of the curve.
“In October, we see scope for further moderation in inflation, as the drivers that were obtainable in September 2025 are likely to persist,” CardinalStone stated.
Forex speculation is at an all-time low, with the gap between official and parallel market exchange rates narrowing steadily. The naira has sustained a strong rally in recent months, trading at N1,455/$ in the parallel market and N1,475/$ at the official window — a modest difference of just N20. This stability, alongside the surge in Nigeria’s foreign reserves to $43.05 billion, reflects growing market confidence. The decline in speculative activity, coupled with improved forex liquidity, suggests that the Central Bank of Nigeria (CBN)’s economic reforms are gaining traction and delivering tangible results across the financial ecosystem, reports Assistant Editor COLLINS NWEZE
For years, speculative trading in the foreign exchange (forex) market posed a major setback for the Nigerian naira, discouraging capital inflows and weakening the domestic economy. However, that trend is changing — and for the better. After a turbulent past marked by significant value loss, the naira is now showing strong signs of recovery, thanks to a mix of structural reforms and renewed investor confidence.
This recovery is being attributed to a range of interlinked factors — from a growing demand for the naira to a marked reduction in speculative trading. Equally important is the consistent rise in Nigeria’s foreign reserves, which currently stand at $43.05 billion, signaling improved economic confidence. Central to this turnaround are the far-reaching forex reforms introduced by the Central Bank of Nigeria (CBN) under the leadership of Governor Olayemi Cardoso. These reforms are beginning to yield significant results, particularly in curbing speculative practices and closing the gap between the official and parallel market exchange rates. The CBN has also intensified its commitment to stabilizing the currency by increasing foreign exchange supply to retail end-users, minimizing distortions in the market, and maintaining effective foreign reserves management.
The injection of liquidity into the forex market, combined with rising compliance with regulatory policies, has helped to ease the pressure on the naira and restore investor confidence. This renewed confidence is attracting more foreign portfolio investments and encouraging the participation of international oil companies, both of which are contributing to greater forex inflows. There is also growing interest from foreign investors, supported by improved market transparency, a more efficient FX framework, and strengthening macroeconomic fundamentals. As a result, Nigeria’s external reserves have continued to rise. CBN Governor Cardoso recently disclosed that the gross external reserves stood at $43.05 billion as of September 11, 2025, compared to $40.51 billion at the end of July 2025 — providing an import cover of 8.28 months and reinforcing the growing stability of the naira.
“Similarly, the second quarter 2025 current account balance recorded a significant surplus of $5.28 billion compared with $2.85 billion in first quarter of 2025,” Cardoso stated during the 302nd monetary policy committee meeting held this week in Abuja.
FX speculations dip
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.
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, attributed the ongoing stability of the naira against dollar and other world currencies to the CBN’s policies. 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. For instance, 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 sustain 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. This plans are expected to be formally approved and signed by the institution’s board of directors, and it must be accompanied by relevant extracts from the board meeting where the plan was reviewed and endorsed.
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. He said that the FX Code was built on six core principles: ethics, governance, execution, information sharing, risk management and compliance, as well as confirmation and settlement processes. These principles, he explained, aligned with international standards while addressing the unique challenges within Nigeria’s foreign exchange market.
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.”
Besides FX Code, the apex bank also introduced the Electronic Foreign Exchange Matching System (EFEMS), which has proven effective in other economies in enhancing the functionality of the foreign exchange market. The EFEMS was meant to check forex market distortions, eliminate speculative activities and instill transparency. The EFEMS, which is commonplace in developed and developing markets offers real-time information on currency rates, trading volumes, and market activity.
Additionally, the CBN lifted the 2015 restriction barring 41 items from accessing FX at the official market to enhance trade and investment. These reforms and developments reflect the bank’s commitment to creating an enabling environment for inclusive economic development. However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance. 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.
How it started
Cardoso had upon assuming office in October 2023, prioritized reforms to rebuild Nigeria’s economic buffers and strengthen resilience. In the foreign exchange market, the apex bank faced a backlog of over $7 billion in unfulfilled commitments and a fragmented FX regime characterised by multiple forex rates, which had encouraged arbitrage opportunities. “Over the past year, we have undertaken critical reforms to unify Nigeria’s exchange rate, eliminating distortions and restoring transparency. This unification has enabled us to clear the outstanding foreign exchange obligations, giving businesses—ranging from manufacturers to airlines—the confidence to plan and invest in the future. To further enhance the functionality of the foreign exchange market, we are introducing an electronic FX matching system, which has proven effective in other markets,” Cardoso said.
Foreign capital inflows to the domestic economy remains crucial elements in the drive to achieve monetary and fiscal policy stability. The apex bank is cultivating more sources of FX to increase dollar inflows, boost access to manufacturers and retail end users. From moves to boost diaspora remittances through new product development, the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the CBN has simplified dollar-inflow channels for FX dealers to boost business and economic growth.
Policies supporting 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 initiative is also expected to provide a secure and efficient platform for managing funds and investing in Nigeria’s financial markets. Since the beginning of this year, eligible NRNs have continued to get the opportunity to own any of the Non-resident Nigerian accounts. 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 is 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 entire nations. 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.
The naira struck a major rally yesterday as exchange rate at the parallel markets fell below official market, putting pressure on currency speculators.
The naira yesterday closed at N1,450 per dollar at the parallel markets, stronger than N1,475 per dollar it exchanged in the official window where banks and other financial institutions carry out transactions.
The naira had on Wednesday closed around N1,475 per dollar at the parallel market, sustaining relative stability at the official window.
At the parallel markets dominated by bureau de change operators and unofficial foreign exchange (forex) transactions, many operators traded at huge losses.
A Bureaux De Change (BDC) trader based in Ikeja, Lagos, Mohammed Gabi, said many FX dealers lost huge funds after selling below purchase rates as exchange rate gap narrowed.
“Many BDC operators sold dollar below the purchasing amount as they feared further losses. We expect the trend 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.
Industry source said there has been increased dollar liquidity in the parallel market, which took many black market dealers unawares.
“I can tell you that a lot of dollars came into the parallel market, forcing those holding back dollars to offload their funds with fear. If the trend, continues, we could see dollar exchanging around N1,400 per dollar as projected in many quarters,” the source 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.
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.
CBN Governor, Olayemi Cardoso 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 first quarter of 2025,” Cardoso stated during the 302nd monetary policy committee meeting held this week in Abuja.
Analysts insist that the forex reforms instituted by the Cardoso-led CBN are stabilizing the exchange rates and improving overall health of the economy.
The reforms were instituted to entrench transparency, accountability and improve dollar access in the foreign exchange market.
President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the naira gains showed the level of creativity the Central Bank puts in ensuring that more forex flows into the economy and remain accessible to businesses
Speaker of the House of Representatives, Abbas Tajudeen, said on Wednesday that the House is committed to ensuring transparency, accountability, efficiency, and effective implementation of the naira for crude policy of the federal government.
Speaking through the Deputy Minority Leader at the inauguration of the ad-hoc committee to the implementation and oversight of the policy, Speaker Abbas said the exercise is imperative as it marks a critical step towards ensuring transparency, accountability, and efficiency in one of the most critical policy initiatives in our energy sector.
The Speaker said that the committee has been entrusted with the important task of overseeing the implementation, effectiveness, and inter-agency coordination of the Naira-for-Crude Oil Policy.
He said, “Its work is vital to ensuring that the objectives of the policy are met and that any gaps in execution are identified and corrected. The House expects nothing less than a thorough, impartial, and well-documented process that will contribute to the overall stability of our economy”.
Speaker Abbas said the Naira-for-Crude Oil Policy carries significant implications for Nigeria’s foreign exchange stability, revenue generation, and long-term energy security, pointing out that a thorough examination of its framework will enable the committee to determine whether the policy is achieving its intended objectives, identify any gaps in its implementation, and highlight areas where adjustments may be required.
He said, “Such an assessment will provide the House with clearer guidance in exercising its legislative commitment, and we trust they will deliver results that meet the expectations of this chamber and the hopes of the people we serve”.
He assured that the 10th House of Representatives remains dedicated to advancing the Renewed Hope Agenda of President Bola Ahmed Tinubu’s administration, with particular emphasis on tackling the economic challenges that continue to weigh heavily on Nigerians.
He said, “Our resolve is to ensure that the legislature serves as a true partner in progress by aligning its priorities with the aspirations of the people and the policy direction of the government.
“We are committed to working collaboratively across party lines and with all relevant stakeholders to strengthen laws and policies that promote sustainable growth, enhance the welfare of citizens, and safeguard the nation’s resources for present and future generations.
“Stakeholder engagement will be central to this assignment, as meaningful results cannot be achieved in isolation. The involvement of government agencies, industry operators, civil society, and other key actors will give the committee a broad and balanced perspective. Such collaboration will help shape recommendations that are realistic, sustainable, and aligned with the national interest, while also strengthening public confidence in the work of the House.
“The task before this ad-hoc committee requires diligence, courage, and a clear sense of purpose. I urge members of the committee to carry out their work with integrity, objectivity, and dedication, bearing in mind that their deliberations and recommendations will shape the course of this policy and influence the well-being of millions of Nigerians.
“In doing so, they will strengthen our legislative processes and contribute to the progress of the nation. The House has full confidence in their competence and in the success of this initiative. Your partnership is crucial in ensuring that the objectives of this exercise are fully realized”.
Chairman of the Committee, Boniface Emerengwa, said Nigeria is blessed with abundant crude oil reserves, but lamented that the benefits of this God-given resource have not always translated into maximum value for our people.
Emerengwa said, “The volatility of foreign exchange markets, over-dependence on the dollar, and the persistent challenges facing our economy make it imperative that we explore innovative ways to strengthen our currency, reduce external vulnerabilities, and secure long-term benefits for Nigerians.
“The Naira-for-Crude Oil Policy is one such innovation. It seeks to provide a framework where transactions in our crude oil sector can increasingly be denominated in Naira rather than in foreign currencies. The shift, if properly structured, will boost confidence in the Naira and reduce pressure on our foreign reserves, stimulate domestic economic activities, and enhance Nigeria’s sovereignty over its resources.
According to him, the task before the Committee is therefore both urgent and significant. He added that the mandate is to critically examine the feasibility, sustainability, and potential impact of the Naira-for-Crude Oil Policy, engage with stakeholders across government, the Oil and Gas industry, financial institutions, and international partners, and identify possible risks, challenges, and opportunities inherent in this policy shift.
He said the committee is also saddled with the responsibility to make clear evidence-based recommendations that will guide the House in ensuring that this policy, if adopted, will serve the best interest of our economy and people as envisaged by the Renewed Hope Agenda of Mr. President.
He said the committee was aware that bold reforms often come with skepticism, saying history teaches us that nations that thrive are those that dare to innovate, adapt, and take ownership of their economic destiny.
