The Nigerian naira has experienced another gain against the U.S. dollar, closing at N1,567/$1 on the official Enhanced Foreign Exchange Market (EFEM) platform on Thursday, December 5, 2024. This marks the third consecutive day of appreciation, following the Central Bank of Nigeria’s (CBN) shift to the EFEM system. The new rate is the best closing rate for the naira since October 8, when it closed at N1,561.7/$1 under the previous NAFEM system.
Best Gain in Two Months
The N1,567/$1 rate represents a gain of N41 from the previous day’s closing rate of N1,608/$1. During the day, the exchange rate fluctuated between a high of N1,610 and a low of N1,565, with a weighted average rate of N1,587. This reflects a notable recovery and improvement in the naira’s value against the dollar over the last few days.
On the parallel market, the dollar traded for around N1,640/$1, while exchange rates on investment apps such as Bamboo and Trove quoted rates of N1,653 and N1,654, respectively. This means the gap between the official and parallel market exchange rates is narrowing, with a difference of less than N60, or about 4%.
EFEM Platform Boosting Market Transparency and Price Discovery
The launch of the EFEM platform is playing a significant role in improving price discovery and market transparency in Nigeria’s foreign exchange market. The Central Bank of Nigeria (CBN) introduced this platform to consolidate various FX windows, including the Investors & Exporters (I&E) window, and simplify currency trading.
The EFEM is designed to publish daily foreign exchange rates for public access, aiming to enhance market clarity and streamline operations. This new system is aligned with the CBN’s broader goals of addressing inefficiencies in the foreign exchange market while promoting a more transparent and regulated system.
The move comes after the release of revised guidelines by the CBN in late November 2024, which emphasized stricter compliance measures for FX transactions. With the EFEM now in operation for several days, the Nigerian naira has been showing signs of stabilization and stronger performance against the dollar, which could signal ongoing positive effects from the new system.
