CBN Governor: Inflation Declining, Forex Market Stabilising in Nigeria

Olayemi Cardoso, the governor of the Central Bank of Nigeria, claims that after two years of extensive monetary changes, Nigeria’s economy is clearly improving.

At the 60th Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria, Cardoso spoke to bankers and financial leaders in Lagos and said that Nigeria has “turned a decisive corner” in its reform process.

He claimed that lower inflation, a more stable foreign exchange market, and more investor confidence all indicate that the economy is returning to equilibrium.

The Governor claims that distortions that have long plagued the economy are being gradually corrected by the Bank’s adoption of traditional monetary policy and stricter regulatory control.

By October 2025, inflation had decreased from 34.6% in November 2024 to 16.05%. Additionally, food inflation has decreased to 13.12% from nearly 22% earlier in the year. According to Cardoso, the CBN would keep modifying its policy tools in an effort to steer inflation toward single-digit levels.

Developments in the foreign exchange market were a significant portion of his review. Cardoso affirmed that the CBN had paid off the multibillion-dollar foreign exchange backlog that the current administration inherited, which was earlier believed to be worth over seven billion dollars. He pointed out that foreign airlines, manufacturers, and portfolio investors now feel more confident as a result of the arrears being cleared.

He credited changes like the Nigerian FX Market Conduct Code, the Electronic Foreign Exchange Management System, and the harmonization of exchange rates for bringing stability back.

According to Cardoso, these actions have decreased opacity, deterred arbitrage, and made it possible for the naira to move within a narrower range. Compared to the time when it extended over 60%, the gap between official and parallel market pricing has recently dropped to less than 2%.

Investor inflows, which totaled 20.98 billion dollars in the first ten months of 2025—a 70% increase over the entirety of 2024—have also been boosted by increased stability.

Cardoso emphasized that Nigeria’s external reserves have recovered and are now at 46.7 billion dollars, the greatest amount in over seven years, with more than 10 months’ worth of import coverage. He emphasized that rather than new borrowing, reserves are increasing due to greater diaspora remittances, non-oil exports, and stronger FX liquidity.

Regarding the financial system’s condition, he stated that bank recapitalization is going smoothly. Before the deadline of March 31, 2026, sixteen institutions have either reached or exceeded the revised capital thresholds, while twenty-seven banks have already raised additional cash.

This year’s stress tests, he continued, demonstrate that the financial system is still generally sound. The Bank has also finished a thorough examination of the cash distribution network, updated regulations for branch closures, and tightened control of ATMs and POS agents.

Nigeria’s removal from the Financial Action Task Force’s “grey list” was a significant accomplishment, according to Cardoso. He clarified that nations on the list frequently experience a 7.6% decline in capital inflows during the first year. He said that Nigeria’s departure has increased international trust in the nation’s financial behavior and reduced compliance pressure on correspondent banks.

He also highlighted the fintech industry’s and digital payments’ explosive rise. Over 40 innovators are currently housed in the regulatory sandbox, more than 12 million contactless cards have been issued, and switching businesses’ interoperability has improved. According to Cardoso, the CBN will keep encouraging innovation as long as it does so within a framework that protects consumers and financial stability.

The Governor pointed out that international rating agencies have started to recognize Nigeria’s progress in reform. Nigeria was recently raised from B- to B with a stable outlook by Fitch, from Caa1 to B3 by Moody’s, and from stable to positive by S&P.

Cardoso listed several top priorities for 2026, such as bolstering banks’ resilience, enhancing price stability through a more sophisticated inflation-targeting framework, growing the digital payments network, improving oversight of fintech operators, updating internal CBN procedures, and forging closer ties both domestically and internationally.

He concluded his speech with confidence, stating that Nigeria is now better equipped to withstand external shocks because to a flexible exchange-rate policy, increased non-oil exports, an expanding services sector, and stronger reserves.