Nigeria’s Naira Shows Promise: A Critical Look at Foreign Investment and CBN Reforms

The Nigerian Naira recently posted a N7.10 gain, buoyed by a surge in foreign portfolio investment (FPI). Nearly $21 billion flowed into the country in the first ten months of 2025. It’s a sizable jump, perhaps signaling a turning of the tide for Nigeria’s economy.

Currency performance is a delicate dance. This recent appreciation seems to mirror renewed confidence among foreign investors. Government policy shifts and macroeconomic improvements are likely playing a role. The CBN data reveals the Naira strengthened by 0.5 percent after Friday’s trading. Slight dips occurred, of course, but the overall weekly trend points upward.

On the streets, in the parallel market, the Naira weakened a bit. Traders are blaming short-term demand pressures. It is important to acknowledge the disparity between official rates and what people experience daily.

CBN Governor Olayemi Cardoso highlighted the FPI surge. A 70 percent increase over 2024 figures is impressive. The 428 percent leap from 2023 is even more eye-catching. He frames it as proof of reinvigorated investor confidence. He also pointed out that Nigeria had received $21 billion in foreign portfolio investments as of October, the highest annual level ever recorded.

CFG Advisory CEO Tilewa Adebajo suggests this trajectory was predictable. Their data pointed toward surpassing $20 billion in FPI. But he also wisely cautions about the government’s need to sustain reforms. He stresses the urgency of tackling Nigeria’s persistent security challenges. Economic progress needs a safe foundation, a point that can’t be overstated. Adebajo added that the government must restore fiscal discipline and roll out policies capable of stimulating long-term economic growth that directly impacts citizens’ living conditions.

Cardoso emphasized the FX market transformation, attributing it to the unification of exchange rates. Clearing the multi-billion-dollar FX backlog is no small feat. Businesses can breathe a little easier now that planning has become more predictable.

New initiatives like the Nigerian Foreign Exchange Code and the Electronic Foreign Exchange Management System (EFEMS) are intended to bring transparency and efficiency. Bloomberg BMatch powers EFEMS. The goal is better price discovery and real-time regulatory oversight. Time will tell if these measures truly curb manipulation and instill lasting market discipline. The CBN also stated that the naira now trades within a more stable and narrower range, with the gap between the official and parallel markets shrinking to under 2 percent from over 60 percent previously.

Nigeria’s external sector is reportedly stronger. The current account balance saw significant growth. Foreign reserves have climbed to levels not seen in years. The CBN claims this growth is “organic,” driven by market forces and non-oil exports. It’s tempting to be optimistic, but skepticism remains prudent. We’ve seen reserves built on shaky foundations before.

Non-oil exports are performing well, which is encouraging. This growth is linked to exchange-rate flexibility. Remittances are also up, likely due to increased confidence in official channels. The Non-Resident BVN initiative could further boost these inflows.

The CBN is committed to a flexible exchange rate. The aim is to absorb shocks while preventing excessive volatility. A revised FX Manual is coming soon, promising to broaden market participation. The question is whether these changes will truly create a level playing field.

Now, what to make of all this? On one hand, the FPI influx and the Naira’s appreciation offer a glimmer of hope. The CBN’s reforms seem to be having some effect. Yet, challenges persist. Security concerns, fiscal discipline, and the need for inclusive growth remain critical. We cannot ignore the nagging feeling that these gains could be fragile. FPI can be fickle. A shift in global sentiment, a misstep in policy, and this progress could unravel quickly.

From my experience, these situations demand cautious optimism. Celebrating too soon is a recipe for disappointment. Instead, let’s watch closely, analyze critically, and demand sustainable solutions. Real change lies not just in numbers, but in tangible improvements for the average Nigerian.

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Keywords: Nigerian Naira, Foreign Investment Nigeria, CBN Reforms, Naira Appreciation, FX Market Nigeria, Non-oil Exports, FPI Inflows, Nigeria Economy