Financial analysts across Nigeria have praised the Central Bank of Nigeria (CBN) for introducing the Electronic Foreign Exchange Matching System (EFEMS), describing it as a pivotal move toward achieving transparency and efficiency in the country’s foreign exchange market. The CBN, on December 2, 2024, unveiled new guidelines for interbank forex trading through EFEMS, which financial experts believe will strengthen the forex ecosystem.
According to 9am News, EFEMS requires banks to display real-time quotes and match orders with available supply based on market realities. Senior financial analyst Tobi Bakare commended the initiative, stating that it underscores the CBN’s commitment to fostering a fair and robust forex market. “By mandating real-time transparency in trading, EFEMS promotes governance and efficiency, making the forex market more reliable,” Bakare noted.
Key Features of EFEMS
The newly introduced guidelines mandate a minimum trade value of $100,000 per transaction, with increments set at $50,000. This measure aims to regulate interbank forex trading, reduce counterparty risks, and ensure compliance with CBN regulations. Furthermore, EFEMS establishes a centralized platform for all forex transactions, serving as a clearinghouse to streamline operations and enable effective monitoring.
Babatunde Babajide, a tax expert and financial advisor, described EFEMS as a “game-changer” for Nigeria’s foreign exchange market. He emphasized that the platform addresses inefficiencies and speculative trading practices that have plagued traditional systems. “This initiative not only enhances transparency but also lays the foundation for a market-driven exchange rate,” Babajide remarked. He also lauded CBN Governor Yemi Cardoso for introducing reforms such as the digitization of forex trading, which he believes will promote stability in the forex market.
Addressing the Naira’s Decline
The introduction of EFEMS comes at a critical time, as Nigeria’s currency, the Naira, has lost over 70% of its value since its devaluation and floating last year. These policies have made the Naira one of the worst-performing currencies globally, heightening the need for decisive measures like EFEMS.
Tax auditor Kayode Bamidele shared his views in a LinkedIn post, highlighting EFEMS’s potential to serve as a central hub for forex transactions. “It’s a long-overdue solution that could stabilize the market if implemented correctly,” Bamidele wrote.
According to 9am News, the EFEMS platform is expected to reduce market distortions and speculative trading while promoting adherence to CBN regulations. This strategic reform could mark a turning point in addressing Nigeria’s prolonged forex challenges and restoring confidence in the market.
With the rollout of EFEMS, financial analysts remain optimistic about the future of forex trading in Nigeria, provided that its implementation is robust and transparent.
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