Cardoso Defends CBN Forex Reforms, Says Nigeria Now Has Transparent FX Market

Governor of the Central Bank of Nigeria (CBN), Mr Olayemi Cardoso, has defended the apex bank’s foreign exchange reforms, insisting that Nigeria now operates a transparent, liquid and functional foreign exchange market, while stressing that the country needs a competitive currency to drive sustainable economic growth.

Cardoso stated this while responding to questions from journalists after the Monetary Policy Committee (MPC) concluded its 306th meeting in Abuja, where it retained the Monetary Policy Rate (MPR) at 26.5 per cent.

The committee’s decision marked the second consecutive meeting in which the benchmark lending rate was left unchanged, following a 50-basis-point reduction approved in February 2026.

The decision came despite a slight moderation in the country’s inflation rate. According to the National Bureau of Statistics (NBS), Nigeria’s headline inflation eased marginally to 15.91 per cent in June from 15.93 per cent recorded in May.

Addressing concerns over developments in the foreign exchange market, Cardoso reaffirmed the CBN’s commitment to maintaining a transparent, market-driven exchange rate regime based on the willing-buyer, willing-seller principle.

He emphasised that the value of the naira would continue to be determined by market forces and economic fundamentals rather than administrative controls.

“The price is a moving target,” the CBN governor said, explaining that the exchange rate would ultimately reflect the strength of the country’s underlying economic fundamentals.

According to him, increased crude oil production and exports, higher foreign direct investment inflows, stronger domestic productivity and reduced dependence on imports are among the key factors that would strengthen the naira over time.

Cardoso expressed satisfaction with the progress achieved since the implementation of the foreign exchange reforms, describing the market as fully functional, open and transparent.

He revealed that daily turnover in the foreign exchange market has at times exceeded one billion dollars, a development he said demonstrates growing investor confidence and improved market liquidity.

The CBN governor maintained that Nigeria requires a competitive currency to support economic expansion and expressed confidence that the current market framework provides a solid foundation for long-term exchange rate stability.

Speaking on the introduction of the Nigeria Foreign Overnight Rate Average (NOFA), Cardoso described the new benchmark as a major reform aimed at improving transparency and efficiency in the country’s financial markets.

He explained that NOFA measures the actual cost of overnight secured funding between banks using real transaction data instead of estimates or judgement-based submissions.

According to him, the benchmark aligns Nigeria’s financial system with international best practices, similar to the transition from the London Interbank Offered Rate (LIBOR) to transaction-based reference rates adopted in leading financial markets, including the United Kingdom and the United States.

Cardoso noted that the introduction of NOFA would enhance the effectiveness of monetary policy transmission and support the CBN’s long-term inflation-targeting framework.

He added that as Nigeria’s financial markets continue to deepen, stronger alignment is expected between the Monetary Policy Rate and the new benchmark.

The CBN governor also commended members of the media for helping Nigerians better understand the rationale behind the apex bank’s monetary policy decisions.

He acknowledged that many of the reforms introduced by the bank had been difficult but necessary, adding that informed public engagement and accurate reporting had contributed significantly to public understanding of the policies.

Cardoso further welcomed the CBN’s recognition as the Global Central Bank of the Year 2026, describing the award as a national achievement rather than a personal honour.

He said the recognition reflected the collective efforts of the bank, government institutions, financial market participants and the media in strengthening Nigeria’s monetary and financial systems.

Urging Nigerians to take pride in the achievement, Cardoso said the international recognition serves as evidence that the country’s ongoing monetary and financial sector reforms are gaining global acknowledgement and yielding positive results.