GistReel

The Nigerian Naira appreciated substantially at both the official and parallel foreign exchange markets on Friday, ending the week on a positive note.

Data from the Central Bank of Nigeria (CBN) revealed that the Naira strengthened to N1,535 per dollar on Friday, improving from N1,567 per dollar on Thursday, marking a gain of N32.

Meanwhile, FMDQ data showed that at the close of Friday’s trading, the Naira’s exchange rate ranged between N1,480 and N1,700.76 per dollar.

In the black market, the Naira gained significantly, trading at N1,600 per dollar on Friday compared to N1,715 per dollar on Thursday, appreciating by N115.

Factors Behind Naira’s Gain Against Dollar

According to BusinessDay NG, the improvement in the Naira’s value is linked to the enhanced transparency in the forex market following the introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the CBN.

The EFEMS platform, launched on Monday, automatically matches buy and sell orders in real-time, ensuring fairness, efficiency, and greater confidence in the FX market. This system allows authorized dealers, including banks, to conduct transactions swiftly and transparently, promoting liquidity.

An anonymous source explained, “This transparency has shown that banks had more liquidity (dollar supply) before the launch of the platforms,” emphasizing the system’s role in restoring market confidence.

Additionally, Gbolohan Ologunro, a portfolio manager at FBNQuest, noted that the surge in dollar inflows was influenced by active participation from Foreign Portfolio Investors (FPIs), drawn by attractive yields on treasury bills. At recent auctions, yields hit record highs, peaking at 30.71%, before slightly dropping to 29.75%.

Market Optimism

Financial experts have expressed optimism that EFEMS will address long-standing challenges affecting the Naira and Nigeria’s FX reserves. With increased dollar liquidity and improved transparency, stakeholders anticipate sustained stability in the foreign exchange market.