Speaking at a joint press briefing in Washington, DC, alongside the Minister of Finance, Wale Edun, during the 2026 Spring Meetings of the International Monetary Fund (IMF) and World Bank, Cardoso outlined a shift away from a heavily managed system toward a more market-driven framework.
Transition to a market-driven FX system
According to Cardoso, Nigeria’s foreign exchange regime has evolved significantly from a period when the CBN was the dominant price setter. He noted that the current structure now allows for “willing buyers and willing sellers,” with market participants determining exchange rates more freely.
“The foreign exchange system that used to operate in those days is very different from what it is now,” he said. “It is market-driven. There is more liquidity in the market. There is confidence. Investors come in and go out as they like.”
He added that the improved structure has reduced the need for frequent interventions by the central bank, signalling a gradual deepening of market efficiency.
Rising turnover and reduced intervention
Cardoso further disclosed that Nigeria’s FX market is now recording an average daily turnover of about $500 million, often without direct intervention from the apex bank. This, he said, reflects growing participation and improved transparency within the system.
The reforms are part of broader efforts to stabilise the economy and attract foreign capital inflows amid ongoing macroeconomic adjustments.
External reserves and IMF benchmark comfort
Addressing concerns around declining external reserves, the CBN governor maintained that recent fluctuations should be viewed within a normal operating range. He stressed that Nigeria’s reserves remain above the minimum threshold recommended by the IMF.
“We already have way beyond what the IMF even recommends for you to have as your minimum reserve level. We are in a very comfortable position,” he said, adding that short-term declines should not be misinterpreted as structural weakness.
Recent data shows that Nigeria’s external reserves fell by $1.37 billion—about 2.75 percent—within six weeks, declining from a 17-year high of $50.02 billion on March 11 to $48.64 billion as of April 16. Forecasts by Fitch Ratings also project a further decline to about $47 billion by year-end.
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| Wale Edun, the minister of finance, and Olayemi Cardoso, CBN governor, during joint press briefing in Washington, DC, United States |
Looking ahead, Cardoso said the CBN is targeting a significant increase in diaspora remittances, with a goal of reaching $1 billion monthly by the end of 2026. Current inflows are estimated at around $600 million per month.
The target reflects ongoing efforts to diversify foreign exchange sources and strengthen external buffers beyond oil revenues, as part of broader monetary and financial stability reforms led by Central Bank of Nigeria.
Reform narrative and market expectations
While the CBN leadership continues to project confidence in the reforms, the evolving FX landscape remains under close scrutiny from investors and analysts. The shift toward a more liberalised market is widely viewed as a structural pivot, but its long-term success will depend on sustained liquidity, policy consistency, and the ability to attract durable foreign inflows.
For now, the central bank is positioning the reforms as evidence of improved transparency, stronger investor participation, and a gradual move toward a more efficient and self-regulating foreign exchange market.