The naira on Monday appreciated to a record N1,452.79 per dollar in the official foreign exchange market, marking its strongest level since the commencement of trading on the Electronic Foreign Exchange Matching System (EFEMS).

This represents a gain of 14.34 percent or N208.33 compared to N1,661.12 recorded in December 2024, when the EFEMS platform was first introduced.

On a day-to-day basis, the naira strengthened by 0.4 percent or N5.16, as the dollar quoted at N1,452.79 on Monday, compared to N1,457.95 quoted on Friday at the Nigerian Foreign Exchange Market (NFEM), according to data published by the Central Bank of Nigeria (CBN).

In the parallel market, also known as the black market, the naira closed at N1,485 per dollar on Monday, the same rate it traded the previous week.

A market report by Coronation research stated that the local currency traded mixed during the week, as the official exchange rate appreciated by 1.19 percent week-on-week (equivalent to N17.39) to close at N1,457.96 per dollar. Meanwhile, the parallel market rate weakened slightly by 0.67 percent week-on-week (or N10) to N1,500 per dollar, narrowing the premium between the parallel and official markets to N14.65 per dollar from N42.04 per dollar recorded in the previous week.

Foreign exchange inflows through the Nigerian Foreign Exchange Market improved to $1.37 billion from $1.10 billion in the previous week, according to a market update by Coronation Merchant Bank Research. The report noted that foreign portfolio investors (FPIs) remained the dominant source of inflows, contributing 33.52 percent ($460.01 million) of total transactions. This was followed by exporters at 14.92 percent, non-bank corporates at 10.76 percent, the CBN at 6.63 percent, and other sources accounting for 28.58 percent of total inflows.

On the reserves front, Nigeria?s gross external reserves rose marginally by 0.40 percent week-on-week (equivalent to $169.70 million), reaching $42.87 billion as of October 24, 2025. Analysts attributed this increase to stronger foreign exchange inflows and limited outflows, reflecting improved liquidity in the official market.

Looking ahead, analysts at Coronation Merchant Bank expect the official rate to remain below the N1,500 per dollar threshold, supported by expectations of sustained FX liquidity and continuous inflows from key market segments.

It will be recalled that on November 26, 2024, the Central Bank of Nigeria directed all banks operating in the interbank FX market to adopt the Bloomberg BMatch system for trading. The platform, which became operational on December 2, 2024, was introduced to enhance transparency, efficiency, and price discovery in the Nigerian foreign exchange market.

The CBN subsequently issued comprehensive guidelines for the operation of the interbank foreign exchange trading system through the Electronic Foreign Exchange Matching System (EFEMS). The guidelines pegged the minimum tradable amount at $100,000, with incremental clip sizes of $50,000, in a move aimed at promoting transparency, liquidity, and efficiency in FX transactions.

In a circular issued to all banks, the then director of the Financial Markets Department, Omolara Duke, explained that the EFEMS initiative was designed to ensure ?transparent, fair, and efficient FX trading, minimise counterparty risks, and enforce compliance with CBN regulations.?

The EFEMS platform, introduced under the CBN?s reforms to modernise Nigeria?s FX market, continues to drive improved price discovery, market discipline, and confidence among investors and participants, further supporting the naira?s sustained appreciation. (BUSINESS DAY)

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