The Nigerian naira made significant gains against the US dollar at the parallel market on Wednesday, December 4, 2024, closing at N1640/$1. This marked a 5.2% or N90 appreciation compared to the previous day’s rate of N1730/$1.
This surge is attributed to the commencement of trading activities on the newly introduced Enhanced Foreign Exchange Market System (EFEMS), a platform aimed at increasing transparency and enhancing regulatory oversight in Nigeria’s forex market. Operators believe the EFEMS will help streamline currency trading by consolidating the country’s foreign exchange markets, replacing the Investors & Exporters (I&E) window.
While the parallel market exchange rate for dollar inflows was recorded at N1640/$1, the rate for cash transactions closed at N1664/$1. The official market also showed positive movement, with the exchange rate closing at N1,608/$1, an improvement from N1,625/$1 the previous day. The Central Bank of Nigeria (CBN) reported an official rate of N1,613.69/$1 for the day.
The launch of EFEMS is seen as a promising development, with reports indicating that supply exceeded demand in its first days of operation. The system is expected to reduce market fragmentation and enhance liquidity. However, experts warn that sustaining this momentum will require strong policy support, careful management of liquidity, and efforts to curb speculative trading.
This initiative is part of the CBN’s broader efforts to address inefficiencies and improve the overall functioning of Nigeria’s foreign exchange market. The EFEMS is central to this strategy, providing a more transparent and centralized approach to forex trading, with daily exchange rates made publicly accessible.
