Nigeria’s currency, the naira, has appreciated significantly, gaining N125 against the dollar within a month of the Electronic Foreign Exchange Matching System (EFEMS) launch. Analysts believe this marks the beginning of a recovery for the naira, with positive prospects for 2025.
According to the Central Bank of Nigeria (CBN), the naira strengthened by 8%, with the dollar quoted at N1,535 on January 3, 2025, compared to N1,660 on December 2, 2024, when EFEMS officially commenced.
EFEMS was introduced on December 2, 2024, following an announcement by the CBN on October 3, 2024. Designed to enhance transparency and curb speculation in Nigeria’s foreign exchange market, the system is tailored for authorized dealers in the Nigerian Foreign Exchange Market (NFEM). The rollout followed a two-week trial in November 2024.
Ayodele Akinwunmi, a senior relationship manager at FSDH Merchant Bank, attributed the naira’s appreciation to EFEMS and other CBN policies, which have boosted foreign exchange supply and market transparency. Akinwunmi noted that customers now have easier access to forex, with rates better reflecting market realities.
He also pointed out that seasonal factors, such as reduced dollar demand during the Christmas holidays, contributed to the naira’s recent gains.
Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), praised the CBN’s interventions through EFEMS. He emphasized the need to enhance retail forex market liquidity by involving Bureaux De Change (BDCs). Gwadabe proposed using BDCs to manage exchange rate volatility and achieve national budget targets, expressing confidence that their increased engagement could ensure greater market stability.
Despite EFEMS’ success, challenges remain. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), acknowledged the progress but highlighted the persistent influence of the unregulated black market. “The measures taken by the CBN are yielding positive results, but this is a work in progress. Speculators and manipulators continue to find new ways to disrupt the market,” Yusuf explained.
The naira opened 2025 on a strong note, trading at N1,540 per dollar on January 2 and closing at N1,538.23 on January 3 in EFEMS. This recovery follows a challenging 2024, during which the naira experienced over 40% depreciation due to two government-led devaluations.
The introduction of EFEMS and related reforms has sparked optimism among analysts and businesses alike, as Nigeria takes significant steps toward stabilizing its foreign exchange market and strengthening its currency.
