Forex Market Stability, Falling Inflation Anchor Nigeria’s Economic Recovery, CBN tells Senate

•Says reserves hit seven-year high at $46.7bn, backlog cleared, naira strengthens as investors return

•Senate demands explanation on N1.44trn surplus query

•Hails falling inflation, forex stability

Sunday Aborisade in Abuja

Central Bank of Nigeria (CBN) yesterday told Senate that Nigeria’s economic recovery had entered its most stable and promising phase in more than a decade, driven by renewed investor confidence, a historic rebound in foreign reserves, sustained disinflation, and a near-complete convergence of the foreign-exchange market.

Speaking before Senate Committee on Banking, Insurance and Other Financial Institutions, in Abuja, CBN Governor Olayemi Cardoso declared that bold monetary and foreign-exchange reforms undertaken since mid-2025 had anchored a macroeconomic turnaround that was now gaining international recognition.

The engagement opened with a firm demand for transparency by the committee chairman, Senator Tokunbo Abiru, who set the tone for the session by insisting on full explanation of the Auditor-General’s query alleging the non-remittance of N1.44 trillion of CBN’s operating surplus for 2022.

While commending the apex bank for achieving what he described as the most significant stabilisation of the FX market in recent years, and overseeing a dramatic decline in inflation, Abiru stressed that public confidence in monetary governance required absolute clarity on the controversial surplus figures.

He said the senate expected a “clear, comprehensive and unambiguous explanation” that addressed the facts, remedial steps taken, and safeguards against future infractions.

Responding, Cardoso delivered an extensive review of the economy’s performance, asserting that Nigeria is experiencing renewed macroeconomic stability across all critical indicators.

He reported that headline inflation had now fallen for seven straight months, dropping from 34.6 per cent in November 2024 to 16.05 per cent in October 2025, representing the steepest and most sustained disinflation in more than a decade.

Food inflation, he added, eased to 13.12 per cent, driven by improved domestic supply conditions and a more predictable FX environment.

Cardoso described the foreign-exchange landscape as “fundamentally transformed,” with speculative attacks and arbitrage opportunities significantly curtailed.

He said the gap between the official and parallel markets was now below two per cent, compared with over 60 per cent a year earlier, marking the tightest convergence in a decade.

He added that the naira had shown “remarkable stability,” appreciating to N1,442.92 to the dollar at the Nigerian Foreign Exchange Market (NFEM) by November 26, stronger than the N1,551 average recorded in the first half of the year.

He attributed the gains to improved liquidity, the deployment of the Electronic Foreign Exchange Matching System, and the operational rollout of the Nigeria FX Code.

One of the standout achievements Cardoso reported was the rise in Nigeria’s foreign reserves to $46.7 billion as of November 14, the highest in nearly seven years, and sufficient to cover 10.3 months of imports.

He stated that diaspora remittances had surged from $200 million monthly to about $600 million, while foreign capital inflows reached $20.98 billion in the first 10 months of 2025, a 70 per cent increase over 2024 and more than four times the inflows recorded in 2023.

He confirmed that the CBN had fully cleared the $7 billion verified FX backlog, describing it as “a singular action that restored credibility to the Nigerian market and re-anchored investor confidence”.

Cardoso announced that the balance-of-payments deficit had narrowed by over 90 per cent, and the current account position strengthened significantly due to rising non-oil exports, favourable terms of trade and ongoing import-substitution efforts.

He said the developments had drawn global recognition, with S&P upgrading Nigeria’s outlook from Stable to Positive, Fitch affirming the country’s sovereign rating, and the Financial Action Task Force removing Nigeria from its Grey List.

Cardoso assured the senate that the banking sector remained stable, resilient and well-positioned to support long-term growth.

He said the recapitalisation programme was progressing as scheduled, with 27 banks having raised fresh capital and 16 already meeting or surpassing the new capital thresholds ahead of the March 31, 2026 deadline.

He highlighted improvements in ATM cash availability, enhanced digital-payment oversight, tighter cybersecurity protocols, and more decisive enforcement actions against erring institutions.

The senate committee pressed further on several systemic concerns.

The chairman of the senate panel, Abiru, asked the governor to clarify the sustained 45 per cent Cash Reserve Ratio (CRR) and the rationale for the 75 per cent CRR applied to non-TSA public-sector deposits.

He sought updates on FX forward settlements, circulation of mutilated naira notes, excessive bank charges, lingering failed transactions, and the compliance levels of CBN subsidiaries with parliamentary oversight.

He also requested details on the activities of the Financial Services Regulatory Coordinating Committee in 2025, insisting that strengthened regulatory coordination is essential for ensuring market confidence.

Cardoso assured the lawmakers that CBN would continue to pursue evidence-based monetary policy and maintain transparency in all engagements.

He projected a positive outlook for 2026, with inflation expected to moderate further, FX stability to persist, and the banking sector to remain robust.

He stressed that reforms implemented in 2025 had laid a stronger macroeconomic foundation for sustainable growth.

The CBN governor added that continued alignment between fiscal and monetary authorities would be crucial in positioning Nigeria as a leading investment destination on the continent.

The meeting dissolved into a closed session, which was still ongoing at the time of filing this report.