The naira made remarkable gains against the dollar, closing at N1,535/$1 on Friday, December 6, 2024.
This is a milestone in Nigeria’s forex market, as the naira has strengthened for the third straight day under the Central Bank of Nigeria’s (CBN) Enhanced Foreign Exchange Market System (EFEMS).
The market recorded an intra-day high of N1,575/$1 and a low of N1,510/$1, with an average rate of N1,533.
In a surprising twist, the black market rate plummeted to as low as N1,570/$1.
Sellers in the parallel market reported unusual difficulty finding buyers.
One operator said, “No one wanted to buy dollars,” signaling a dramatic change in market sentiment.
Some sellers were forced to offload dollars for as little as N1,500/$1.
Cryptocurrency platforms also mirrored the trend, with some exchanging stablecoins for naira at under N1,500/$1 on peer-to-peer platforms.
EFEMS Sparks Confidence in Naira
The naira’s rally continues to gather momentum, fueled by the EFEMS, which was launched to enhance transparency in the forex market.
Since the system’s introduction, the naira has consistently improved, gaining against the dollar every day this week.
Friday’s official closing rate of N1,535/$1 represents a significant improvement from Thursday’s N1,567/$1.
This appreciation has also narrowed the gap between the official and black market rates to less than N35, or about 2.3%.
Market analysts believe this is a sign of growing confidence in the naira and a reduction in speculative trading.
Black Market Glut as Sellers Struggle
The black market has experienced a sharp shift, with sellers outnumbering buyers.
Sellers reportedly slashed rates to attract buyers, reflecting a glut in dollar availability.
“The parallel market has never been this quiet. Everyone is holding naira now,” another seller lamented.
This rare development suggests that both individuals and businesses now prefer holding naira over dollars, signaling a potential paradigm shift.
Cryptocurrency and Investment Platforms Adjust Slowly
Investment platforms like Bamboo and Trove quoted dollar conversion rates for naira at N1,549.50 and N1,629.49, respectively.
These rates lag behind the adjustments seen in both the official and black markets.
Cryptocurrency traders also observed the impact, with Bitcoin selling at $101,000 by Friday evening, reflecting gains influenced by international political developments.
EFEMS Revolutionizes Forex Market
The EFEMS has proven to be a game-changer for Nigeria’s foreign exchange market.
The system consolidates all forex transactions into a single transparent market, ensuring that rates are accessible to everyone.
By pricing all forex transactions through EFEMS, the CBN has curbed speculative trading and built trust in the naira.
This has resulted in a more stable and predictable market, benefiting both businesses and individuals.
