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The Central Bank of Nigeria (CBN) disclosed that it sold $543.5 million to authorized dealer local deposit money banks (DMBs) between September 6 and September 30, 2024, as part of efforts to stabilize the naira and reduce foreign exchange (FX) market volatility.
In a statement issued by Omolara Duke, Director of the Financial Markets Department at the CBN, the transactions took place over 11 dealing days through a two-way quote system in the Nigerian Foreign Exchange Market (NFEM). Duke explained that the spot sales were aimed at addressing increased market demand, driven by high commodity imports and seasonal FX needs. All transactions had a value date of T+2, meaning they were settled within two days after the trade.
“This announcement serves to inform and guide the general public about the pricing of foreign exchange,” Duke said. “The rates at which FX was sold to authorized dealers by the CBN should serve as a reference for market participants.”
She reaffirmed the CBN’s commitment to facilitating FX supply to the NFEM as part of its broader strategy for managing foreign exchange in the country.
Earlier, the CBN had introduced the Electronic Foreign Exchange Matching System (EFEMS) to improve transparency and governance in FX transactions within the Nigerian market. The new system is designed to support a market-driven exchange rate, accessible to the general public.
“This initiative aims to curb speculative trading, eliminate market distortions, and provide the CBN with enhanced oversight of the FX market,” Duke stated. “Authorized dealers will now conduct all FX transactions in the interbank market through EFEMS, ensuring transactions are recorded in real-time.”
Duke added that a two-week test run of EFEMS is planned for November, with real-time pricing to be published once the system becomes fully operational. The CBN will also collaborate with the Financial Markets Dealers Association (FMDA) to establish rules governing the use of EFEMS.
“Additionally, the Nigerian FX Code and revised Market Operating Guidelines will provide direction for market participants,” Duke noted. “All authorized dealers are required to ensure full compliance with existing guidelines and regulations governing the Nigerian FX market, and they must complete all necessary documentation, training, and system integrations ahead of the system’s go-live date.”
This initiative is expected to enhance the efficiency of the Nigerian foreign exchange market, reducing speculative activities while providing greater oversight and transparency for all participants.
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