The Nigerian naira saw a slight recovery on Thursday as dollar supply in the official market surged significantly.
According to data from the FMDQ, based on daily trades on the Nigerian Autonomous Foreign Exchange Market, the naira appreciated by 0.60 per cent, closing at N1,659.26 per US dollar, compared to N1,669.15 on October 2, 2024.
This follows a significant depreciation the previous day, when the naira closed at N1,669.15, marking an 8.25 per cent drop from N1,541, the rate recorded on the last trading day of September.
Since the naira fell below the N1,600 threshold in July, it has faced persistent market volatility, fluctuating between N1,500 and N1,600 in its quest for stability, especially during periods of dollar weakness.
FX turnover on Thursday soared by 147.66 per cent, rising from $181.86m to $450.39m, marking the largest single-day turnover since May 24, 2024, when $556.25m was recorded.
This increased liquidity contributed to the naira’s marginal appreciation, providing temporary relief to the currency that has struggled in recent months.
In September, the naira’s price movements stagnated as it attempted to regain balance amid the turbulent market conditions.
While Thursday’s rise in dollar supply offers a positive sign, the currency remains under pressure.
Speaking at a press briefing last week after the monetary policy committee’s 297th meeting in Abuja, the Governor of the Central Bank of Nigeria, Yemi Cardoso, said although the apex bank’s strategy is to unlock as many diversified sources as possible into the foreign exchange section, it is not enough and cannot replace the fundamentals.
The central bank governor said achieving a strong exchange rate would continue to be hampered as long as the country operates on a monolithic economy.
Cardoso also described the Dangote Refinery as a game changer, capable of turning around Nigeria’s dollar-starved economy.
He said that lifting petrol from the $20bn refinery would ease FX pressure, and the effect would spiral into an economy battling dollar shortages.
In a similar development, the CBN on Thursday announced the introduction of an Electronic Foreign Exchange Matching System aimed at transforming the country’s foreign exchange market.
This new system is set to be operational in the Nigerian Foreign Exchange Market by December 1, 2024, following a two-week test run scheduled for November.
The EFEMS is expected to reshape how foreign exchange transactions are conducted in the interbank market by enhancing transparency and promoting a market-driven exchange rate accessible to the public.
According to a circular by the Director of the Financial Markets Department at the CBN, Omolara Duke, the EFEMS will require all authorized dealers to conduct FX transactions using the platform, ensuring that transactions are immediately reflected within the market.
By leveraging the EFEMS, the CBN aims to minimize these speculative activities while offering real-time data on exchange rates, including buy/sell orders.
The circular added, “The new system is expected to enhance governance, and transparency and facilitate a market-driven exchange rate that will be accessible to the public. This development is expected to reduce speculative activities, eliminate market distortions, and give the CBN improved oversight capabilities to effectively regulate the market.
“The CBN will publish real-time prices and buy/sell orders data from the system, and in collaboration with the Financial Markets Dealers Association (FMDA), publish the rules for the EFEMS. The Nigerian FX Code and revised Market Operating Guidelines for the Nigeria Foreign Exchange Market will also provide guidance to market participants.”
