The Nigerian Naira experienced a strong rally on Friday, recording significant appreciation in both official and parallel foreign exchange markets. The development marked a positive end to the trading week, buoying optimism among market stakeholders.
Data from the Central Bank of Nigeria (CBN) showed the Naira strengthened to N1,535 per dollar on Friday, a marked improvement from N1,567 per dollar on Thursday, representing a gain of N32.
At the FMDQ Exchange, where authorized transactions are recorded, the Naira traded within a range of N1,480 to N1,700.76 per dollar by the close of trading.
The parallel, or black market, also reflected a major leap in the Naira’s value, as it traded at N1,600 per dollar on Friday, up from N1,715 the previous day—a notable gain of N115.
CBN’s EFEMS Platform Credited for Market Turnaround
The remarkable appreciation has been attributed to the introduction of the Central Bank’s Electronic Foreign Exchange Matching System (EFEMS). Launched earlier in the week, EFEMS matches forex buy and sell orders in real-time, improving efficiency, fairness, and transparency in the foreign exchange market.
“This system has demonstrated that banks had more dollar liquidity even before its launch,” said an insider familiar with the forex market. The platform has restored market confidence by fostering a more transparent and liquid trading environment.
Foreign Investors Drawn by High Yields
Market analysts have also highlighted the influence of Foreign Portfolio Investors (FPIs) on the Naira’s performance. Gbolohan Ologunro, a portfolio manager at FBNQuest, noted that the surge in dollar inflows was spurred by FPIs capitalizing on attractive yields from treasury bills. Recent auctions recorded yields as high as 30.71% before settling at 29.75%.
Looking Ahead
Financial experts remain optimistic about the Naira’s trajectory. They believe that EFEMS could resolve longstanding challenges in Nigeria’s forex market, ensuring sustained stability and increased dollar liquidity.
With enhanced transparency and strong investor participation, the Naira’s recent gains may signal a turning point for Nigeria’s embattled foreign exchange market.
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