The naira falls to N1,640/$1 in the parallel market on Monday, December 9, 2024, halting a four-day streak of appreciation following the Central Bank of Nigeria’s (CBN) transition to the Enhanced Foreign Exchange Market System (EFEMS).
This represents a N70 or 4.5% decline from the N1,570/$1 rate recorded on Friday, December 6, 2024. The drop is attributed to speculators resisting the naira’s upward trajectory, which had been driven by an increase in dollar supply in recent days.
A Bureau De Change (BDC) operator notes that dollar availability in the market has sharply reduced. “The predicted resistance from speculators is now evident. The naira dropped from N1,535/$1 on Friday to N1,640/$1 today, and dollar supplies have completely dried up,” the operator states.
Other market sources report a higher exchange rate of N1,665/$1, reflecting intensified pressure on the local currency.
In the official EFEM market, the naira depreciates slightly, trading at N1,538.5/$1 on Monday, December 9, 2024, compared to N1,535/$1 recorded on Friday. This marks a N3.50 or 0.23% drop.
Daily trading in the EFEM market shows a high of N1,554/$1 and a low of N1,524.5/$1, with a weighted average rate of N1,539.25. The widening gap between the official rate and the parallel market rate now stands at N101.5, up from N35 on Friday.
The EFEMS platform, introduced by the CBN, continues to enhance transparency and efficiency in Nigeria’s foreign exchange market. By consolidating all forex transactions into a single system, EFEMS eliminates the previously fragmented windows, such as the Investors & Exporters (I&E) FX Window and SME Window.
This centralized system requires all forex transactions to follow a unified pricing mechanism, ensuring transparent and accessible daily exchange rates. Since its launch, EFEMS has helped strengthen the naira and reduce speculative trading activities.
Despite the progress, forex speculators continue to exert pressure on the market. Industry experts warn that the recent depreciation reflects efforts by speculators to recover losses incurred during the naira’s appreciation streak.
The Association of Bureau De Change Operators of Nigeria (ABCON) emphasizes the need for sustained efforts to discourage illegal practices such as speculative trading and currency substitution. Experts also call for increased engagement with BDC operators to address market volatility.
While challenges persist, the EFEMS platform remains a crucial tool in stabilizing the naira and fostering long-term efficiency in Nigeria’s forex market.
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