The Naira has shown significant improvement against major foreign currencies, including the British Pound, Euro, and Canadian Dollar, since the Central Bank of Nigeria (CBN) launched the Electronic Foreign Exchange Matching System (EFEMS) in December 2024. This system was introduced to enhance transparency and operational efficiency in Nigeria’s foreign exchange market. As a result, the Naira appreciated by 11.02% against the British Pound, moving from N2,105.63 per Pound in December 2024 to N1,896.62 in February 2025.
The Naira also gained 11.3% against the Euro, with its value increasing from N1,745.83 per Euro to N1,569.16 in the same period. Similarly, the Canadian Dollar saw a significant drop in value against the Naira, now trading at N1,100, compared to previous rates. In the parallel market, also known as the black market, the Naira showed similar strength, strengthening to 1,920/£ from 2,238/£ in December 2024 for the British Pound, further solidifying its gains.
The Central Bank of Nigeria has emphasized the positive impacts of these improvements, citing enhanced market liquidity and investor confidence as key outcomes. The CBN’s ongoing efforts, such as the introduction of the Nigeria Foreign Exchange Code and EFEMS, are seen as critical in promoting a fairer and more transparent FX market. The Monetary Policy Committee (MPC) also noted that the stability in the currency market, alongside falling fuel prices, is expected to have a positive impact on inflation and price dynamics in the country.
However, experts like Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, caution that while progress is being made, challenges in the foreign exchange market persist. The unregulated black market continues to be a significant factor in currency volatility. Economist Bismarck Rewane also warned that the recent gains might be temporary, advising policymakers to proceed with caution, as sustained intervention in the FX market has led to a reduction in Nigeria’s foreign reserves.
SOURCE: BUSINESS DAY