The Central Bank of Nigeria (CBN) announced that it sold $543.5 million to authorized dealer banks between September 6 and September 30. The information was shared in a statement by Omolara Duke, the Director of the Financial Markets Department at CBN.
Transaction Details
- The sales were conducted through a two-way quote at the Nigeria Foreign Exchange Market (NFEM) over 11 dealing days.
- The transactions aimed to mitigate market volatility, which has been heightened by strong demand for commodity imports and foreign exchange (FX).
- The value date for all transactions was set to T+2, meaning settlement occurs two days after the transaction date.
CBN’s Market Strategy
Duke emphasized that the CBN’s efforts aim to provide clarity on FX pricing by sharing the range of rates at which FX was sold to authorized dealers. She reassured the public that the CBN will continue to facilitate the supply of FX in the NFEM as part of its comprehensive FX management strategy.
Introduction of Electronic Foreign Exchange Matching System (EFEMS)
In a move to enhance the foreign exchange landscape, the CBN has announced the introduction of the Electronic Foreign Exchange Matching System (EFEMS) for FX transactions in the NFEM. Key points include:
- Expected Benefits:
- Improved governance and transparency
- A market-driven exchange rate accessible to the public
- Reduction of speculative activities and market distortions
- Enhanced oversight capabilities for the CBN
- Implementation Timeline:
- A two-week test run is scheduled for November.
- The CBN will publish real-time prices once EFEMS becomes operational.
- Market Guidelines:
- The CBN, in collaboration with the Financial Markets Dealers Association (FMDA), will publish rules for the EFEMS.
- Authorized dealers must comply with existing guidelines and ensure all necessary preparations are in place before the launch.
This strategic initiative is part of the CBN’s ongoing efforts to stabilize the foreign exchange market and improve its functionality for all participants