Naira Appreciates to N1644 on Electronic FX Platform
The naira appreciated against the US dollar on BMatch system deployed by the Central Bank of Nigeria (CBN) for authorised currency dealers. The exchange rate, however, steadied at Nigeria’s autonomous foreign exchange market.
The narrative around the naira exchange rate is fast-changing with the transition to the electronic FX trading platform – the Bloomberg BMatch system on Monday.
Since the beginning of the week, the naira’s negative volatility in the forex markets has eased. The parallel market rate also recalibrated below N1700 for the first time in a long time.
According to spot FX data on the FMDQ platform, the naira remained stable at N1,672:69 per US dollar in the Nigerian autonomous foreign exchange market as FX trades stabilised.
However, the naira appreciated by 0.7% to N1,644 per greenback in the Electronic Foreign Exchange Matching System (EFEMS).
The interbank Electronic Foreign Exchange Market continued to see improved liquidity, with transactions occurring between rates of N1,570 and N1,675.43 on the platform before it settled at N1644.
A slew of analysts who spoke with MarketForces Africa on exchange rate trends and the market outlook differed on some issues and the prognosis. While some believe the naira gained because FX liquidity improved in the market, others think transparency has begun to play a significant role.
Transparency and strong US dollar volume on BMatch will reveal the naira’s true value, analysts told MarketForces Africa, adding that ineligible bids and transactions cannot go unnoticed.
“The thing is, the CBN does not trust authorised dealer banks… all Apex Bank moves since the emergence of Yemi Cardoso as governor have been to ensure increased transparency on how banks trade FX,” analysts said while responding to MarketForces Africa in a forum.
In the parallel market, the exchange rate appreciated significantly and gained N20 over the day to settle at N1690 per greenback.
Some critics believe that Nigerian banks destroy the naira to make a profit. Elsewhere, oil prices increased slightly as traders anticipate that OPEC+ will announce an extension of supply cuts this week.
Additionally, ongoing geopolitical tensions continue to influence market sentiment. Brent crude is priced at $74.00 per barrel, while WTI is at $70.26 per barrel. Meanwhile, gold prices surged after data indicated a moderate rise in U.S. private payrolls last month.
This comes ahead of comments from Federal Reserve Chair Jerome Powell later today and Friday’s non-farm payrolls report. Gold is valued at about $2,654.47 per ounce.
