THE ongoing implementation of the fourth edition of the Foreign Exchange Manual by the Central Bank of Nigeria (CBN) since June 1, has strengthened the naira and triggered foreign reserves growth. The naira appreciation was supported by improved liquidity in the Nigerian Foreign Exchange Market (NFEM) window, alongside growing external reserves that have continued to bolster confidence in the market. The naira appreciated by N5.74 at the official market, closing at N1,361.05 to dollar. The gross external reserves climbed to a record $50.04 billion, reinforcing investor confidence and boosting the CBN’s capacity to support the local currency. The naira and foreign reserves have continued to soar since the June 1 takeoff of the new Foreign Exchange Manual inaugurated by the Central Bank of Nigeria (CBN). The new manual is expected to deepen FX transparency, improve liquidity and strengthen market confidence and liquidity. The new policy also aligns with the CBN’s broader vision of ensuring that businesses and individual have equal access to FX in a transparent and liquid market. The naira strengthened further against the dollar across foreign exchange (FX) market segments, signifying improving transparency, consistency, and efficiency in the country’s FX market.

Data published by the CBN showed that the naira appreciated by N5.74 at the official market, with the dollar quoted at N1,361.05 last week compared to N1,366.79 on Monday. In the parallel market, commonly referred to as the black market, the naira remained unchanged at N1,385 per dollar. As a result, the gap between the official and parallel market exchange rates widened to N24 per dollar on Tuesday from N19 recorded on Monday. Nigeria’s external reserves, which provide the CBN with the capacity to support the local currency and meet external obligations, have continued to rise steadily. Data published on the apex bank’s website showed that reserves increased to $49.80 billion as of June 1, 2026, from $48.32 billion recorded on May 7. The gross external reserves have further climbed to a record $50.04 billion, reinforcing investor confidence and boosting the CBN’s capacity to support the local currency.

Under the new guidelines, Authorised Dealers are permitted to engage in spot foreign exchange transactions among themselves, with customers, and with the CBN in any acceptable foreign currency for delivery within a maximum of two business days (T+2). The manual stipulates that all interbank spot transactions must be executed through an electronic trading system approved by the CBN. The apex bank further directed Authorised Dealer banks to maintain adequate credit, settlement, and risk limits for all counterparties participating on the approved trading platform. Banks are also required to strictly comply with Net Open Position (NOP) limits and ensure that no breaches occur at the close of any trading session. The manual also allows Authorised Dealer banks to conduct spot foreign exchange transactions with non-resident customers and clients in any acceptable foreign currency, provided settlement is completed

The new manual, is expected to serve as a fresh regulatory guide for banks, importers, exporters, government agencies, and other participants in the foreign exchange market. For decades, Nigeria’s foreign exchange market has remained one of the most sensitive parts of the country’s economy. Any movement in the value of the naira directly affects prices of food, transport, school fees, medicines, fuel, manufacturing costs, and the general cost of living. Businesses depend heavily on foreign exchange to import raw materials and machinery, while investors closely study the stability of the market before bringing money into the country. For ordinary Nigerians, the foreign exchange market may appear distant and technical, but its impact is felt daily through inflation, jobs, purchasing power, and overall economic confidence. It is against this critical background that the launch of this fourth edition has attracted widespread attention across the financial sector, banking industry, and business community.

In recent years, Nigeria has battled severe pressure on the naira, low foreign exchange liquidity, multiple exchange rates, speculative trading, and declining investor confidence. These structural problems created deep uncertainty for businesses and contributed significantly to inflationary pressure across the country. For years, many manufacturers complained that they could not access foreign exchange to import raw materials, while airlines struggled to repatriate their earnings. Foreign investors frequently delayed investments because they feared they would be unable to take out profits when necessary, and the country witnessed a wide gap between official and parallel market exchange rates at different periods. The launch of the new manual therefore represents much more than a routine regulatory update, reflecting the latest phase of a broader effort by the central bank to rebuild confidence in the Nigerian foreign exchange system after years of instability. At the official launch, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, described the new manual as part of efforts to strengthen Nigeria’s macroeconomic foundation, improve transparency, and restore confidence in the foreign exchange market.

His remarks went beyond the unveiling of a policy document, reflecting the broader direction of the current foreign exchange reforms being pursued by the apex bank under the present administration. Cardoso made it clear that the foreign exchange market is not simply a platform for buying and selling dollars.

According to his policy philosophy, it plays a major role in determining price stability, investment confidence, and the smooth movement of goods and capital within an economy that is connected to global markets. He noted that foreign exchange is a critical enabler in any open economy because it anchors price stability, facilitates the flow of goods and capital, and shapes investor sentiment.

The Deputy Governor for Economic Policy, Mohammed Sani Abdullahi, whose presentation preceded Cardoso’s remarks, provided deeper technical details regarding the operational provisions of the manual.

His contribution showed clearly that the revised manual is not merely an administrative document, but is a major component of the ongoing transformation of Nigeria’s foreign exchange market and wider financial system.

Abdullahi traced the origins of the reform initiative to the assumption of office by Cardoso, noting it was initiated from the beginning of the administration to restore confidence, improve transparency, deepen liquidity, and strengthen the market.

This demonstrates that the review was not an isolated exercise, but forms part of a broader restructuring of Nigeria’s monetary and exchange rate framework. The deputy governor said the central bank recognised the urgent need for a framework that reflects current realities, aligns with international standards, reduces inefficiencies, and supports a more transparent, rules-based, and market-oriented system. This facilitates clearer price discovery, which is the process through which market forces determine exchange rates based on demand and supply conditions.

The contributions of the Minister of Finance and Coordinating Minister of the Economy, the banking industry leadership, and major commercial bank executives further expanded the significance of the launch, showing a rare level of alignment between fiscal authorities, monetary regulators, and the banking sector.

Representing the Minister of Finance, the Permanent Secretary for Special Duties, Mohammed Sanusi Danjuma, described the manual as a major step in the country’s effort to strengthen its foreign exchange management system.

His remarks reflected the position of the federal government that foreign exchange reform is not solely a monetary policy matter but a key part of Nigeria’s wider economic transformation agenda.

Danjuma noted that the launch comes at a strategic period as the country continues implementing bold fiscal and non-fiscal reforms under the administration of Bola Ahmed Tinubu, including fuel subsidy removal, tax reforms, and exchange rate liberalisation.

While these measures were introduced to correct long-standing economic distortions, they initially contributed to rising inflation and increased living costs, creating pressure on households and businesses.

The finance ministry’s endorsement therefore signals strong, continued alignment on the reform agenda, with Danjuma noting that policy consistency and predictability are absolutely essential for investment and growth.

Offering a perspective from the commercial banking operators, Oliver Alawuba, the Chairman of the Body of Banks’ Chief Executives and Group Managing Director of United Bank for Africa, described the revised manual as part of a broader policy direction anchored on transparency, ethical conduct, stronger documentation, and improved oversight.

He linked it directly to earlier initiatives such as the Electronic Foreign Exchange Matching System and the Nigerian Foreign Exchange Code, which are designed to modernise market governance.

Alawuba made a striking comparison between the current foreign exchange market and the situation two or three years ago, noting that in the past, bank customers constantly asked whether banks had foreign exchange available, whereas today the table has been turned to the point where banks now ask customers whether they have foreign exchange to sell. This reflects what banking executives see as a substantial improvement in liquidity and stronger confidence in formal market participation, shifting away from an era of severe scarcity where the central bank was the primary supplier through forced periodic interventions.

Nigeria recorded $10.37 billion in capital importation in the first quarter of 2026, marking an 83.8 per cent rise compared to the $5.64 billion achieved in the corresponding period of 2025.

This followed foreign investors ramped up purchases of money market instruments and bonds.

This is according to the latest data released by the National Bureau of Statistics (NBS) stated. The data showed that capital inflows also rose by 61% quarter-on-quarter from $6.44 billion recorded in the fourth quarter of 2025, underscoring growing investor appetite for Nigerian financial assets.

The report said, “In Q1 2026, total capital importation into Nigeria stood at $10.37 billion, higher than $5.64 billion recorded in Q1 2025, indicating an increase of 83.83 per cent. In comparison to the preceding quarter, capital importation increased by 60.97 per cent from $6.44 billion in Q4 2025.”

Portfolio investment remained the primary driver of capital importation during the quarter, accounting for $9.86 billion or 95.1 per cent of total inflows.

The figure represents an 89.5 per cent increase from the corresponding period of 2025 and a 79.8 per cent rise from the previous quarter. Within the category, money market instruments attracted $6.50 billion, while investments in bonds stood at $3.23 billion. The two asset classes jointly accounted for over 98 per cent of portfolio inflows.

In contrast, Foreign Direct Investment (FDI) remained weak despite a marginal annual improvement. FDI inflows stood at $135.08 million, representing just 1.3 per cent of total capital importation during the period. While this was 7 per cent higher than the level recorded a year earlier, it declined by more than 62 per cent from the previous quarter.

Other investments contributed $374.48 million, accounting for 3.6% of total inflows. Loans made up the bulk of this category at $364.43 million, while trade credits accounted for $10 million. The latest figures highlight the continued preference of foreign investors for short-term financial assets over long-term productive investments in the economy.

Sectoral analysis showed that the banking industry remained the biggest destination for foreign capital. The sector attracted $7.55 billion, representing 72.8 per cent of total capital imported into the country during the quarter.

The financing sector followed with $2.43 billion or 23.4 per cent, meaning the two sectors accounted for more than 96 per cent of all inflows recorded during the period. The production and manufacturing sector received $152.27 million, while investments in shares stood at $75.34 million.

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