Market News

The Naira has appreciated to N1,587.29/$1, N1,590/$ on official and parallel FX markets respectively

The naira has recorded significant appreciation in the past five days, buoyed by Nigeria’s successful $2.2 billion Eurobond issuance and the launch of the Central Bank of Nigeria’s (CBN) Electronic Foreign Exchange Matching System (EFEMS).

This emerged as the National Bureau of Statistics (NBS) on Friday, revealed that the country’s total merchandise trade increased to N35.16 trillion in the third quarter of the year (Q3 2024) compared to N31.89 trillion in the preceding quarter.

On the official FX market, CBN quotes for the Nigerian Foreign Exchange Market (NFEM) showed the naira strengthened progressively against the dollar over the week.

For instance, on Monday, the naira opened at N1,662.77/$1 and by Tuesday it appreciated to N1,644.78/$1, marking the first sign of a more dynamic market environment. Midweek trading saw further gains, with the currency rising to N1,613.86/$1 by Wednesday. Furthermore, on Thursday the momentum continued as the naira appreciated to N1,587.29/$1 and on Friday, the currency further strengthened to N1,533.93/$1, its strongest gain in weeks. The week’s movements represented a cumulative gain of N128.84, equivalent to a 7.7 per cent appreciation.

Also, the parallel market saw positive momentum as the nation’s currency which had for a month hovered around N1,745/$1, appreciated to N1,720/$1 on Tuesday.

The pace of appreciation accelerated midweek, with the naira strengthening to N1,670/$1 on Wednesday, by Thursday it traded at N1,640/$1, and on Friday, it closed the week at N1,590/$1. This represented a dramatic five-day gain of N155 during the week.

The Debt Management Office (DMO) earlier this week successfully raised $2.2 billion through Eurobonds, comprising $700 million in 6.5-year notes priced at 9.625 per cent and $1.5 billion in 10-year notes at 10.375 per cent.

The issuance drew strong demand, with the order book peaking at $9 billion and participation from global investors spanning North America, Europe, Asia, the Middle East, and Nigeria.

The DMO had described the outcome of the issuance as a testament to investors’ confidence in Nigeria’s macroeconomic policies and prudent fiscal and monetary management.

DMO’s Director General, Patience Oniha, had celebrated the achievement, noting the strong response from global investors and reaffirming the DMO’s commitment to transparency and ongoing engagement with the international capital markets.

Also, the EFEMS launch, which coincided with the Eurobond issuance, provided additional support to the naira. The platform, operated through Bloomberg’s BMatch system, allows licensed dealer banks to place and match foreign exchange orders anonymously, ensuring transparency and fostering market discipline.

By introducing a centralised trading mechanism, EFEMS aims to eliminate distortions and encourage market-driven pricing.

CBN Governor, Olayemi Cardoso, had described EFEMS as a critical component of the central bank’s broader strategy to stabilise the foreign exchange market and restore investor confidence.

Market participants welcomed the initiative.

Meanwhile, the country’s total merchandise trade increased to N35.16 trillion in the third quarter of the year (Q3 2024) compared to N31.89 trillion in the preceding quarter, the NBS disclosed on Friday.

The figure represented an increase of 81.35 per cent compared to the value recorded in the corresponding period of 2023.

According to the Foreign Trade Statistics for Q3 2024, released by the statistical agency, the trade balance remained positive at N5.81 trillion, indicating an increase of 43.60 percent compared to the preceding quarter.

In the period under review, exports accounted for N20.48 trillion or 58.27 per cent of total trade, indicating an increase of 98 per cent compared to N10.34 trillion in Q3 2023 and 16.76 per cent rise compared to N17.54 trillion in Q2 2024.

Nigeria’s exports continued to be dominated by crude oil exports valued at N13.41 trillion, representing 65.44 per cent of total exports while non-crude oil exports stood at N7.08 trillion, accounting for 34.56 per cent of total exports, of which non-oil products contributed N2.50 trillion or 12.21 per cent of total exports.

On the other hand, imports amounted to N14.67 trillion or 41.73 per cent in the review period, representing an increase of 62.30 per cent compared to N9.04 trillion in Q3 2023 as well as 8.71 per cent over N13.49 trillion in Q2 2024.

Using the Standard International Trade Classification, the top-ranked group import was mineral fuels with N5.14 trillion, representing 35.03 per cent of total imports, followed by machinery and transport equipment with N3.78 trillion or 25.77 per cent of total imports, and Chemicals & related products with N1.97 trillion or 13.45 per cent of total imports.

Spain remained the country’s main export destination with N2.26 trillion or 11.07 per cent of total exports, followed by exports to the United States of America with N1.68 trillion or 8.25 per cent of total exports, France with N1.58 trillion or 7.75 per cent, Netherlands with N1.43 trillion or seven per cent and Italy – N1.37 trillion, representing 6.72 per cent of total exports.

These five countries collectively accounted for 40.79 per cent of total exports in Q3, 2024, the NBS stated.

Nigeria exported mainly mineral products valued at N18.12 trillion or 88.46 per cent of the total export, followed by prepared foodstuffs; beverages, spirits and vinegar; tobacco’ worth N722.66 billion or 3.53 per cent of total exports and vehicles, aircraft and parts thereof; vessels among others with N667.11 billion or 3.26 per cent of total exports.

The country exported goods mainly to Europe valued at N9.23 trillion 3.35 billion or 45.07 per cent of total exports, followed by exports to Asia N5.18 trillion or 25.31per cent while exports to America was valued at N3.37 trillion, representing 16.49 per cent of total exports.

Exports to Africa stood at N2.48 trillion or 12.13 per cent of total exports; out of which, goods exported to ECOWAS countries stood at N1.54 trillion.

James Emejo and Nume Ekeghe