The Governor of the Central Bank of Nigeria, Olayemi Cardoso, on Tuesday defended the apex bank’s foreign exchange reforms, saying Nigeria now operates a transparent and functional foreign exchange market.
He said a competitive currency is critical to driving economic growth and sustaining investor confidence.
He spoke while responding to questions from journalists after the Monetary Policy Committee (MPC) retained the Monetary Policy Rate (MPR) at 26.5 per cent at the end of its 306th meeting in Abuja.
The MPC’s decision marked the second consecutive meeting in which the benchmark interest rate was left unchanged, following a 50-basis-point reduction in February 2026.
The decision came despite a marginal easing in Nigeria’s headline inflation, which slowed to 15.91 per cent in June from 15.93 per cent in May, according to the National Bureau of Statistics.
Speaking on the foreign exchange market, Cardoso said the CBN would continue to pursue policies that ensure a transparent, liquid and market-driven exchange rate system based on a willing-buyer, willing-seller framework.
He emphasised that the exchange rate remains market-determined and would ultimately be influenced by economic fundamentals rather than administrative controls.
“The price is a moving target,” Cardoso said, noting that where the exchange rate eventually settles would depend on improvements in key economic indicators.
According to him, stronger oil production and exports, increased foreign direct investment, and higher domestic productivity that reduces import dependence are among the critical fundamentals needed to strengthen the naira over time.
He said the CBN was satisfied with the progress made in the foreign exchange market, describing it as fully functional, open and transparent.
He disclosed that daily turnover in the market sometimes exceeds one billion dollars, which he said reflects growing confidence and improved liquidity.
The CBN Governor maintained that Nigeria requires a competitive currency and expressed confidence that the current market structure provides the appropriate foundation for sustainable exchange rate stability.
Shedding light on the introduction of the Nigeria Foreign Overnight Rate Average (NOFA), Cardoso described the benchmark as an important reform designed to improve transparency in the country’s financial markets.
He explained that NOFA reflects the actual cost of overnight secured funding between banks based on real transactions rather than estimates or judgement-based submissions.
According to him, the new benchmark aligns Nigeria with global best practices, similar to the transition from the London Interbank Offered Rate (LIBOR) to transaction-based reference rates adopted in major financial markets such as the United Kingdom and the United States.
Cardoso said the benchmark would strengthen the transmission of monetary policy and support the CBN’s long-term inflation-targeting framework.
He added that greater synergy is expected between the Monetary Policy Rate and NOFA as the financial market continues to deepen.
He noted that many of the policy decisions taken by the apex bank had been difficult but necessary, adding that informed public engagement has contributed to the reforms.
Cardoso also welcomed the recognition of the CBN as the Global Central Bank of the Year 2026, describing the honour as a national achievement rather than a personal one.
He said the recognition reflected the collective contributions of various stakeholders, including the media, and urged Nigerians to celebrate the accomplishment as evidence of the country’s progress in strengthening its monetary and financial systems.