See key features as CBN unveils new e-FX platform to crash dollar, explains benefits

• The CBN is determined to find a solution to the naira free fall and speculations in the foreign exchange markets
• To achieve this, the CBN is set to launch the Electronic Foreign Exchange Matching System (EFEMS)
• The EFEMS, the CBN hopes, will enhance transparency and provide real-time exchange rate data

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

The Central Bank of Nigeria (CBN) has introduced an Electronic Foreign Exchange Matching System(EFEMS) designed to monitor and regulate the naira exchange rate against the US dollar.

This new system is scheduled to commence entire operations by December 1, 2024, in the Nigerian Foreign Exchange Market by December 1 2024, after a two-week preliminary test run scheduled for November.

CBN to boost transparency in forex market Photo credit: Bloomberg/contributor
Source: Getty Images

The new system was disclosed in a circular issued by Omolara O. Duke, Director of the Financial Markets Department at the CBN.

In the circular, CBN said EFEMS will mandate all authorized dealers to conduct foreign exchange transactions exclusively through the platform, and this is expected to ensure immediate transaction reflections within the market, marking a significant departure from traditional methods plagued by delays and opacity.

The circular reads:

“The Central Bank of Nigeria hereby announces the introduction of the Electronic Foreign Exchange Matching System for foreign exchange transactions in the Nigerian Foreign Exchange Market to be implemented no later than 1 December 2024. There will be a two-week test run in November 2024.“Authorised dealers will subsequently conduct all foreign exchange transactions in the interbank FX market on the Electronic Foreign Exchange Matching System approved by the CBN, where transactions will be reflected immediately.”

CBN wants to find solutions to speculative activities

Furthermore, the CBN plans to publish real-time pricing information and buy/sell orders data from EFEMS in collaboration with the Financial Markets Dealers Association.

The circular added:

“The new system is expected to enhance governance and transparency and facilitate a market-driven exchange rate that will be accessible to the public. This development is expected to reduce speculative activities, eliminate market distortions, and give the CBN improved oversight capabilities to effectively regulate the market.“The CBN will publish real-time prices and buy/sell orders data from the system, and in collaboration with the Financial Markets Dealers Association, publish the rules for the EFEMS. The Nigerian FX Code and revised Market Operating Guidelines for the Nigeria Foreign Exchange Market will also provide guidance to market participants.”

Two new platforms identified as threats to naira

Earlier, Legit.ng reported that Nigerians identified the emergence of two cryptocurrency platforms as the reason for the recent fall of the naira.

The earlier decline of the naira was attributed to alleged market manipulation by Binance.

Nigerians have blamed the latest depreciation on new crypto exchange platforms, namely BYBIT and BITGET.

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Source: Legit.ng