We’re not propping up naira –CBN

•To review banks’ complaint, compensation processes  •Retains rates, other parameters

By Chinwendu Obienyi

The Central Bank of Nigeria (CBN) has dismissed suggestions that it is heavily intervening in the foreign exchange (FX) market to support the naira, insisting that its participation has remained minimal relative to overall market activity.

Governor, Olayemi Cardoso, while responding to questions fielded by newsmen after the Monetary Policy Committee (MPC) meeting in Abuja on Wednesday, clarified that the apex bank’s interventions in the FX market accounted for just about 1.2 to 1.3 per cent of total market turnover, arguing that recent stability in the naira has largely been driven by reforms that have deepened liquidity and improved transparency.

According to him, the FX market has evolved significantly over the past two years, moving toward a more market-driven structure characterised by “willing buyer, willing seller” dynamics, improved information symmetry, and reduced distortions.

He noted that average daily FX turnover has risen sharply compared to previous levels, with market activity now ranging from about $550 million daily and occasionally spiking as high as $1 billion. This, he said, demonstrates a deeper and more liquid market where price discovery is increasingly determined by participants rather than administrative actions.

“The market now largely operates on its own. Our interventions are very limited relative to total turnover. In 2025, it was about 1.2 to 1.3 per cent. That is not what drives the market,” he said.

The Governor also dismissed claims that the CBN has been drawing down external reserves aggressively to defend the naira, describing such perceptions as outdated. He explained that reserve movements reflect routine obligations and inflows rather than sustained market defense operations. “So to answer your question, no, what we have done and which is normal is that in the course of daily activities there may be need to meet the requirements of various arms of government or loans outstanding obligations due, they have to be paid, and so they are paid, but believe me, as they are paid, so does new money come in”, Cardoso clarified.

He added that the evolution of the FX framework, including electronic trading platforms and updated guidelines, has improved transparency and reduced speculative distortions that previously characterised the market.

Explaining further, Cardoso noted that as part of the ongoing reforms, the revised foreign exchange manual which will take effect from June 1, is expected to further standardise market operations, improve compliance, and encourage greater participation by legitimate market users.

The Governor said the updated framework is also designed to improve access to foreign exchange for genuine end-users and exporters, while discouraging diversion of FX proceeds outside official channels and added that the reforms are expected to strengthen confidence in the FX market over time.

He revealed that there are ongoing efforts to strengthen credit flow to small and medium-scale enterprises (SMEs), including regulatory collaboration with relevant agencies and development finance institutions to expand access to credit. According to him, “New lending to SMEs has increased significantly, with new SME credit reportedly rising to about N199 billion in April 2026, from about N153 billion in March 2026.

Beyond FX matters, the MPC also retained the benchmark Monetary Policy Rate (MPR) alongside other policy parameters, signaling a continuation of the current monetary stance as the CBN balances inflation concerns with growth considerations. According to Cardoso, the decisions of the committee were anchored on a comprehensive assessment of risks in the near-to-medium term outlook.

While stating that the spillovers from the Middle East crisis have exerted upward pressure on energy prices, transportation costs and other logistics, Cardoso said, “Available evidence indicates that the impact of the crisis on the Nigerian economy has been largely muted due to the benefits of prior policy reforms which include, exchange rate stability, improvements in external reserve buffers, strengthening monetary policy transmission, a well-capitalised banking system and ongoing fiscal consolidation”. He noted that the country’s gross external reserves have remained robust at $49.49 billion, sufficient to cover 9.04 months of imports for goods and services.

On financial system issues, the apex bank said it would intensify oversight of commercial banks’ handling of customer complaints and compensation processes, amid rising concerns over excessive or unclear bank charges.

The Governor noted that while some charges, such as stamp duties, are statutory and not imposed by banks, consumer dissatisfaction often arises from poor communication and multiple debit alerts, which can create confusion among customers.

He said the CBN’s Consumer Protection Department is already engaging banks through structured quarterly meetings involving consumer experience executives from deposit money banks and microfinance institutions. The objective, he said, is to improve transparency, enhance dispute resolution, and ensure timely compensation where customers are wrongly debited.

Cardoso further disclosed that the apex bank is reviewing market conduct frameworks to ensure banks maintain stronger compliance standards and are better equipped to manage customer expectations.