How CBN fixed exchange rate disparity in 17 months

Over the past 18 months, the Central Bank of Nigeria (CBN) has implemented policy corrections, market liberalisation, and enhanced transparency to address exchange rate disparities. This was the assessment of Zeal Akaraiwe, CEO of Graeme Blaque, during his appearance on Arise News’ Global Business Report.

In 2025, the parallel market exchange rate has shown a steady appreciation, recently stabilising around the N1,500/$ mark. Reports from Bureau de Change (BDC) operators indicate that the rate in the parallel market currently hovers around N1,500/$, while the official market stands at approximately N1,501/$ as of February 25. This near alignment between the two markets signals a significant convergence.

According to Akaraiwe, a banking and treasury specialist, policy corrections greatly contributed to correcting the missteps in FX management in the country.

“When people complained about the CBN’s issuance of circulars over the last 15 to 18 months, I tell them that the CBN is not regulating by body language,” he noted.

He added, “If past mistakes need fixing, the central bank has to make it clear to the industry —and the best way to do that is through circulars. Honestly, what other option is there? That’s why we saw a flood of circulars in early 2024, clearing up distortions and easing bottlenecks.”

The CBN, in 2024, issued almost 20 circulars revolving around FX management in the country, one of which was on the use of Bloomberg’s BMatch system in interbank FX trading.

According to Akaraiwe, the introduction of BMatch in December was able to expose the information gap that existed in the FX system for most of 2024.

He said, “I recall mentioning sometime last year that many people were unaware that for most of the year—starting around February or March, certainly within the first quarter—the inflows into the economy exceeded the outflows. But this wasn’t widely known.”

“This lack of information contributed to market panic. A clear sign of change came in December when the central bank introduced BMatch—almost immediately, the currency appreciated by 10%.”

“It wasn’t due to an increase in cash flow, additional injections, or direct central bank intervention. The key factor was improved transparency, which made market participants aware of the available supply.”

CBN is not defending the Naira

Unlike certain experts in the finance space, Zeal believes that the CBN is not defending the naira. He noted that in 2024, CBN’s net contribution to the FX market was about 3 percent. This marks a stark contrast to the 70 to 80 percent seen in previous years.

Akaraiwe highlighted, “If you look at historical data—say, 2022 and 2023—you’ll find that the central bank was likely supplying as much as 70% to 80% of the foreign exchange used in the market. That sounds like a defensive position.”

“In contrast, by 2024—just last year—the central bank’s contribution to FX sales in the market dropped to just under 10%. Right. If you break it down further, that’s roughly 4%. If you net out the central bank’s FX sales and purchases in 2024, its actual contribution to the market was about 3 percent.”

“But selling FX is part of the central bank’s routine operations. As the governor has consistently stated, it plays a role in maintaining market stability. What many outside the market don’t realize—but those within the market understand—is that to sustain stability, the central bank not only sells FX but also buys it.”