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Nigeria — Within a week, the naira appreciated by N137.69 against the United States dollar, following the introduction of the Central Bank of Nigeria’s new foreign exchange platform.
This information was gotten from a data in CBN's website on Sunday, revealing the closing exchange rate.
According to the data obtained, the closing exchange rate was pegged at N1672.69 per dollar on Friday, November 29, 2024, and rose to N1,535/$ at the end of the week on Friday, December 6, 2024, representing an 8.24 per cent gain.
This move became imperative as some members of the Organised Private Sector (OPS) has called on the CBN to sustain the Naira gain, saying such would aid economic growth and development in Nigeria.
The currency’s improvement is attributed to the operationalisation of the new FX platform, as well as higher liquidity and stability in the foreign exchange market.
The CBN’s platform has facilitated more transparent trading, which has helped bridge the gap between the official and parallel markets, thereby stabilising the naira.
Throughout the week, the naira saw a steady boost in its exchange rate, with fluctuations each day.
At the start of the week on Monday, December 2, the exchange rate rose by 0.76 per cent to N1,660/$, with the highest rate recorded at N1,678/$ and the lowest at N1,650/$.
By Tuesday, December 3, the closing rate was N1,625/$, rising by 2.11 per cent, with the highest rate at N1,664/$ and the lowest at N1623/$.
The naira continued to strengthen against the dollar on Wednesday, December 4, rising by 1.05 per cent and closing at N1,608/$, with the highest rate at N1,630/$ and the lowest at N1,590/$.
On Thursday, December 5, the exchange rate rose further by 2.55 per cent to N1,567/$, with the highest rate at N1,610/$ and the lowest at N1,565/$.
The naira ended the week rising by 2.04 per cent at N1,535/$, with the highest rate at N1,575/$ and the lowest at N1,510/$on the official market.
This improvement is tracable to the directive issues by the CBN last month, requesting that all banks operating in the interbank FX market to henceforth adopt the Bloomberg BMatch system for trading.
The platform, which became operational on December 2, 2024, aims to enhance transparency and operational efficiency in Nigeria’s FX market.
The CBN explained that the Bloomberg BMatch platform introduces an automated trade-matching system to improve market integrity and facilitate better price discovery, ensuring that trades are more transparent and easier to monitor.
The Director of the CBN’s Financial Markets Department, Omolara Duke, noted in a circular to banks that the initiative represents a significant advancement in ensuring uniformity and seamless operations among market participants.
In a bid to further streamline operations, the CBN also issued detailed guidelines for the interbank FX trading system under the Electronic Foreign Exchange Matching System.
The guidelines set a minimum tradable amount of $100,000, with incremental clip sizes of $50,000, to foster greater transparency and efficiency in the FX market.
Also, Nigeria returned to the international bond market last Monday, raising $2.02bn through Eurobonds sold in two tranches.
At N1,535/$, the naira recorded one of its best performances in recent months, adding to the momentum built since EFEMS was launched.
As the official market experienced rapid gains in the exchange rate, the parallel market.
By the end of the week, the exchange rate was trading at N1,570/$ at the parallel market, a sharp decline from N1,700/$ earlier in the week, as the naira continued its strong recovery against the dollar.
Over the weekend, the naira rose sharply in the parallel market, peaking at N1,530/$ on Saturday morning before settling at N1,580/$ on Sunday.
Reacting, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise and an economist, Dr Muda Yusuf, hailed the move while calling for sustainability.
He said, “The recent improvement in the value of the naira, I’m talking about the naira exchange rate, is a welcome development. It is a development that gladdens the hearts of individuals and corporations because the exchange rate issue has been one of the biggest challenges facing the economy. It has been one of the biggest drivers of inflation, the biggest driver of the high cost of doing business so it is a great relief that we are having this development. Our prayer and hope is that this should be sustained going forward.
“You can ascribe this to several issues. First, we have seen an improvement in our reserves which reached the $40bn mark a few weeks ago, and that implies that the CBN has more power to intervene in the market, and in truth, the CBN has been intervening in the market to stabilise the currency.
“I would like to observe that in the last five months or so, we have seen relative stability in the naira exchange rate, which is a welcome development. Now, we are beginning to see a strengthening of the currency, so the level of our reserves has contributed to this as it elevates the confidence of foreign investors. Then in the last few months as a result of reforms in the foreign exchange market, we are seeing a consistent improvement in autonomous foreign exchange inflow in the country, especially from the international money transfer operators.”
The Director-General of the Nigeria Employers’ Consultative Association, Adeyemi Oyerinde, in his comments called for a sustenance of the stronger naira.
