The exchange rate between the naira and dollar appreciated yet again on the official EFEM market closing at N1,567/$1 on Thursday December 5, 2024.
This is the third consecutive day of exchange rate appreciation since the central bank migrated to the much touted EFEM platform.
At N1,567/$1 the naira has now posted the best closing rate since October 8th when it closed at N1,561.7/$1 when NAFEM under FMDQ was in use.
Best gain in two months
The exchange rate on the official EFEM window closed at N1,567 on Thursday representing a N41 gain from the N1,608/$1 closing rate recorded a day earlier.
- Intra-day high and lows for the day was N1,610 and N1,565 respectively while the weighted average rate printed N1,587.
- On the parallel market where the exchange rate trades unofficially, cash sales for the dollar closed was quoted for around N1,640/$1 as of this evening
- On funding investment apps such as Bamboo and Trove the exchange rate for converting naira into dollar quoted at N1,653 and N1,654 to the dollar respectively.
- This suggest the disparity between the official and parallel market rates is under N60 or around 4%.
Meanwhile Bitcoin prices surged to around $103k before falling to around $99.2k as of when this article was published.
EFEMS boosting price discovery
The newly introduced Enhanced Foreign Exchange Market System (EFEMS) by the Central Bank of Nigeria (CBN) has enhanced transparency in the forex market with the positive gains on the naira evidence of the impacts.
The platform has now recorded three consecutive days of gains boosting the central bank’s target of achieving price discovery.
This new forex trading window consolidates Nigeria’s foreign exchange markets, replacing the Investors and Exporters (I&E) window in a bid to simplify and increase transparency in the forex market.
Backstory
The Central Bank of Nigeria (CBN) released revised guidelines for the Nigeria Foreign Exchange Market (NFEM), signaling a major shake-up in the country’s FX operations.
- The updates, contained in a circular dated November 29, 2024, consolidate all FX windows, redefine the roles of market participants, and introduce stricter compliance and transparency measures.
- This latest move is part of the apex bank’s efforts to address long-standing inefficiencies in the FX market while creating a transparent, well-regulated system.
- A major focus of the revised guidlines focus of the revised guidelines requires that all FX transactions are to be priced through the Electronic Foreign Exchange Matching System (EFEMS), a centralized platform that will also publish daily FX rates for public access.
The platform replaces the fragmented system of multiple windows, such as the Investors & Exporters (I&E) FX Window, SME Window, and Invisible Window.
