For the first time since May, the Naira recorded five straight days of appreciation this week, marking a significant boost in both the parallel and official markets. The local currency closed at N1,555 per dollar in the parallel market and N1,535 per dollar in the official market, reflecting a notable strengthening trend.

Yesterday, the Naira appreciated by N130 or 7.7%, rising from N1,685 per dollar last Thursday to close at N1,555 per dollar in the parallel market. This also represents a N168 or 9.8% gain compared to its rate of N1,720 per dollar last week.

Similarly, the Naira strengthened in the official market, closing at N1,535 per dollar, a gain of N128 or 7.7% from N1,663 per dollar at the end of November. Data from the Daily Nigerian Foreign Exchange Market (NFEM), published by the Central Bank of Nigeria (CBN), revealed that the indicative exchange rate dropped from N1,567 per dollar on Thursday to N1,535 per dollar yesterday.

This development has narrowed the gap between the parallel market rate and the official NAFEM rate to N20 per dollar, compared to N118 per dollar earlier in the week.

Banking officials have attributed the Naira’s appreciation to the introduction of the Electronic Foreign Exchange Matching System (EFEMS), which was launched on Monday. This new system, powered by Bloomberg’s BMatch platform, facilitates real-time forex trading and enhances transparency.

In a circular, the CBN urged banks to adopt EFEMS, stating:

“Banks are strongly advised to liaise with Bloomberg representatives to expedite the onboarding process and address any technical or operational concerns promptly. The CBN will deploy its regulatory power to enhance the implementation of this directive and reserves the right to impose sanctions when necessary.”

A banking executive explained that EFEMS has brought real-time visibility to market activities:

“The system seems to be achieving its goal as you get a feel of where the market is, in real-time. People are putting up orders, matching trades, and providing market color. The market has appreciated since its launch, with the CBN also intervening using the system.”

While EFEMS appears to be driving the current appreciation, experts caution that it is too early to determine whether the gains will be sustained. However, optimism remains that the system could help establish equilibrium in the long run.

As stakeholders continue to monitor the Naira’s performance, the effectiveness of EFEMS and other CBN interventions will play a pivotal role in maintaining market stability and further narrowing the exchange rate gap.