Naira appreciates against dollar

The Nigerian naira broke key resistance levels at the Nigerian Autonomous Foreign Exchange Market as the Central Bank of Nigeria implemented the new Electronic Foreign Exchange Matching System last week The Nigerian currency started last week Monday at N1,663/$ to settle at N1,537 at the official market on Friday showing a price gain of N126/$. […]

The Nigerian naira broke key resistance levels at the Nigerian Autonomous Foreign Exchange Market as the Central Bank of Nigeria implemented the new Electronic Foreign Exchange Matching System last week

The Nigerian currency started last week Monday at N1,663/$ to settle at N1,537 at the official market on Friday showing a price gain of N126/$.

The Naira rose sharply in the parallel market, peaking at N1,530/$ on Saturday morning before settling at N1,580/$ on Sunday in Nigeria’s business capital.

A Bureau de Change (BDC) operator in Abuja who prefers to remain anonymous said: “People are afraid to buy because they don’t know what might happen next. The gain is too fast in just three days.”

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Why is the naira gaining

Unknown to many Nigerians, the Central Bank of Nigeria recently launched a new trading system called the Enhanced Foreign Exchange Market System (EFEMS).

EFEMS essentially consolidates all previous official foreign exchange windows into one unified system.

This consolidation replaces the fragmented structure of multiple windows, such as the Investors & Exporters (I&E) FX Window, the SME Window, and the Invisible Window.

The platform, launched on December 2, 2024, addresses long-standing issues of market opacity and inefficiency by facilitating smooth trading and consistency among participants.

The Bloomberg BMatch platform is described as a game-changing tool for the foreign exchange market, according to Omolara Duke, Director of the CBN’s Financial Markets Department. In a circular to banks, she stated: “This initiative represents a significant advancement in ensuring uniformity and seamless operations among market participants.”.

Authorized dealers, such as commercial banks, can place real-time buy and sell orders through the Electronic Foreign Exchange Matching System (EFEMS). Transactions are automatically matched, ensuring quick execution and providing real-time visibility for regulators and market participants.

CBN Governor Mr. Olayemi Cardoso described EFEMS as a revolutionary step toward achieving price discovery and enhancing market transparency.

Additionally, Nigeria returned to the international bond market last Monday, raising $2.02 billion through Eurobonds sold in two tranches. The offering was oversubscribed by $9.01 billion, significantly boosting liquidity for the local currency.

The Federal Government issued $1.05 billion in 10-year bonds at a 10.375% coupon rate and $700 million in 6-year Eurobonds maturing in 2031 at a 9.625% coupon rate.