The naira has shown remarkable gains over the past five days, bolstered by Nigeria’s successful $2.2 billion Eurobond issuance and the introduction of the Central Bank of Nigeria’s (CBN) Electronic Foreign Exchange Matching System (EFEMS).
In a related development, the National Bureau of Statistics (NBS) announced yesterday that the nation’s total merchandise trade reached N35.16 trillion in the third quarter of 2024, compared to N31.89 trillion in the previous quarter.
Naira’s Progressive Appreciation
On the official foreign exchange market, data from the CBN indicated steady strengthening of the naira against the dollar throughout the week. On Monday, the currency opened at N1,662.77/$1 and appreciated to N1,644.78/$1 by Tuesday. By midweek, it climbed further to N1,613.86/$1, and on Thursday, it traded at N1,587.29/$1. Friday, the naira closed at N1,533.93/$1, marking its strongest performance in weeks. This five-day trend resulted in a cumulative gain of N128.84, reflecting a 7.7% appreciation.
Similarly, the parallel market witnessed positive momentum. After hovering around N1,745/$1 for a month, the naira appreciated to N1,720/$1 on Tuesday. By Wednesday, it strengthened to N1,670/$1 and continued to improve, reaching N1,640/$1 on Thursday and N1,590/$1 by the end of the week. This represented a five-day gain of N155.
Eurobond Issuance Boosts Confidence
Earlier this week, the Debt Management Office (DMO) successfully raised $2.2 billion through Eurobonds, comprising $700 million in 6.5-year notes at 9.625% and $1.5 billion in 10-year notes at 10.375%. The issuance attracted strong demand, with the order book reaching $9 billion and participation from investors across North America, Europe, Asia, the Middle East, and Nigeria.
Patience Oniha, the DMO’s Director General, described the outcome as a testament to investors’ confidence in Nigeria’s economic policies and prudent fiscal management. She highlighted the robust response from international investors and reiterated the agency’s commitment to maintaining transparency and active engagement with global capital markets.
New Forex System Encourages Transparency
The launch of EFEMS, which coincided with the Eurobond issuance, provided additional support to the naira. The system, operated through Bloomberg’s BMatch platform, enables licensed dealer banks to anonymously place and match foreign exchange orders, fostering transparency and enhancing market discipline.
CBN Governor Olayemi Cardoso described EFEMS as a vital component of the central bank’s strategy to stabilise the foreign exchange market and boost investor confidence. Market participants have widely welcomed the platform, which aims to eliminate distortions and promote market-driven pricing.
Trade Performance Strengthens
According to the NBS, Nigeria’s total merchandise trade in Q3 2024 reached N35.16 trillion, up from N31.89 trillion in Q2 2024. This represents an 81.35% increase compared to the same period in 2023. The trade balance remained positive at N5.81 trillion, a 43.60% increase from the previous quarter.
Exports accounted for N20.48 trillion, representing 58.27% of total trade. Crude oil dominated, contributing N13.41 trillion or 65.44% of total exports, while non-crude exports accounted for N7.08 trillion. Imports, on the other hand, totaled N14.67 trillion, making up 41.73% of total trade.
Key Export Destinations
Spain remained Nigeria’s top export destination with N2.26 trillion or 11.07% of total exports, followed by the United States (N1.68 trillion), France (N1.58 trillion), the Netherlands (N1.43 trillion), and Italy (N1.37 trillion). These five countries accounted for 40.79% of total exports in Q3 2024.
By region, Europe received the largest share of Nigeria’s exports at N9.23 trillion or 45.07%, followed by Asia (N5.18 trillion) and America (N3.37 trillion). Exports to Africa stood at N2.48 trillion, with ECOWAS countries accounting for N1.54 trillion of this total.
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