The Nigerian naira has shown significant strength against the euro in the parallel market, driven by ongoing foreign exchange reforms and political uncertainties in Europe.
The EUR/NGN exchange rate dropped from N1852/€ to N1695/€ as of December 2, 2024, reflecting a bearish trend for the euro.
The recently introduced Electronic Foreign Exchange Matching System has tackled longstanding issues of market opacity and inefficiency by enabling seamless trading and fostering uniformity among market participants.
The CBN’s Director of Financial Markets, Omolara Duke, described the Bloomberg BMatch platform as a “revolutionary tool” for transforming Nigeria’s foreign exchange market.
Commercial banks and authorized dealers now utilize the Electronic Foreign Exchange Matching System to place buy and sell orders in real time.
This system ensures faster trade execution while providing market participants and regulators with real-time visibility, enhancing transparency and efficiency in the foreign exchange market.
The euro has recently come under pressure due to the ongoing political situation in France, adding to its challenges in the global market.
The euro is edging closer to the critical $1.05 threshold, having dropped over 3% against the US dollar in the past month.
The situation has been exacerbated by escalating political unrest in France, culminating in a no-confidence vote against Prime Minister Michel Barnier, which was scheduled for last Wednesday night.
The euro remains under pressure as President-elect Donald Trump’s tariff threats pose risks to European exports, especially in the auto sector.
Meanwhile, the European Central Bank plans to further lower interest rates, though many economies in the region are increasingly reliant on fiscal support to sustain growth.
Historically, December has been the euro’s best-performing month against the US dollar, averaging a 1.6% gain over the past 24 years.
The currency has a 71% chance of finishing the month in positive territory, higher than any other month.
Meanwhile, the ECB’s December meeting will be pivotal in shaping the short-term outlook, with the focus on whether they announce a 50-basis-point or 25-basis-point rate cut.
