Credible CBN Policies Stabilising Nigeria’s Economy, Says Uwaleke

Credible monetary policy reforms implemented by the Central Bank of Nigeria have begun to stabilise Nigeria’s economy, moderating inflation, strengthening the naira, and restoring investor confidence, Professor Uche Uwaleke has said.

Uwaleke, Director of the Institute of Capital Market Studies at Nasarawa State University, Keffi, stated this while presenting a paper on Thursday at the CBN Monetary Policy Forum held in Abuja.

In the paper titled “Evaluating the Impact of Recent Monetary Policy Reforms on Inflation, Exchange Rate Stability, and Investor Confidence,” he said the reforms marked a decisive shift from a period of macroeconomic instability characterised by high inflation, exchange rate distortions, and declining investor trust.

Uwaleke a renowned Professor of Capital Market said without the recent Monetary Policy reforms, Nigeria would likely have faced significantly worse outcomes such as higher inflation, weaker currency, depleted external reserves, and capital flight.

According to the University Don, the CBN has done well so far and should remain committed to credible Monetary Policy reforms.

He argued that prior to the reforms introduced in 2023, Nigeria operated multiple exchange rate windows, creating wide disparities that encouraged arbitrage and undermined transparency in the foreign exchange market.

Uwaleke noted that the gap between official and parallel market rates had widened to over 60 per cent at the time, discouraging investment and distorting resource allocation.

“The credibility of monetary policy had weakened significantly before the reforms, with declining reserves and limited investor confidence,” Uwaleke said.

He explained that the CBN’s decision to unify exchange rates, alongside complementary measures such as clearing a $7bn foreign exchange backlog and introducing the Electronic Foreign Exchange Matching System, helped restore transparency and market confidence.

On inflation, Uwaleke said the reforms had delivered notable gains, with headline inflation declining from a peak of 34.6 per cent in November 2024 to 15.06 per cent as of February 2026.

He attributed the downward trend to tighter monetary policy, reduced deficit monetisation, improved exchange rate stability, and better food supply conditions.

“The disinflation process is now firmly established, reflecting sustained policy discipline rather than temporary adjustments,” he said.

Uwaleke further noted that exchange rate stability had improved significantly, with the naira trading at more market-reflective levels and the gap between official and parallel market rates narrowing to single digits.

He added that net external reserves had rebounded strongly, rising from below $4bn to over $34bn, with gross reserves exceeding $50bn in recent weeks.

According to him, these developments have reduced speculative demand for foreign exchange and strengthened confidence in the domestic currency.

On investor sentiment, the economist said Nigeria was witnessing a gradual return of foreign portfolio investors, supported by improved transparency and the resolution of foreign exchange repatriation challenges.

He disclosed that capital inflows of over $20bn were recorded between January and October 2025, while the Nigerian stock market had recorded significant growth, with market capitalisation surpassing N128tn.

“The restoration of investor confidence is perhaps the most important long-term benefit of the reforms,” he noted.

Uwaleke also highlighted increased foreign participation in the ongoing banking sector recapitalisation exercise, describing it as a sign of renewed confidence in Nigeria’s financial system.

Despite the progress, he cautioned that sustaining the gains would require continued policy consistency and institutional strengthening.

He pointed out that the CBN’s planned transition to an inflation-targeting framework represents the next phase of reforms but warned that challenges such as fiscal dominance, weak data systems, and communication gaps must be addressed.

“Inflation targeting will require strong central bank independence, improved forecasting capacity, and effective coordination with fiscal authorities,” he said.

Uwaleke stressed that without the recent reforms, Nigeria could have faced a severe economic crisis marked by accelerating inflation, worsening exchange rate instability, and capital flight.

He added that maintaining policy credibility and deepening collaboration among stakeholders would be critical to consolidating gains and ensuring long-term macroeconomic stability.

Uwaleke’s position aligns with the recent external validation by international bodies which saw the CBN Governor, Olayemi Cardoso winning a global award as the Banker of the year 2025 on account of the success of the Monetary Policy reforms.