Driven by reforms in Nigeria’s forex market and political instability in Europe,the Nigerian naira strengthened against the euro in the parallel market, dropping the exchange rate from N1,852/€ on December 2, 2024, to N1,690/€.
Key Drivers:
1. Forex Market Reforms:
transparency and efficiency has been improved by the introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the CBN.
Omolara Duke, CBN’s Financial Markets Director, called the Bloomberg BMatch platform a “revolutionary tool” for seamless trading.
2. European Political Unrest:
A no-confidence vote against French Prime Minister Michel Barnier, stemming from unpopular tax and spending cuts, coupled with external pressures, including U.S. tariff threats and weak fiscal policies has weakened the euro.
Euro’s Outlook:
With bullish momentum seen in RSI and MACD indicators, recovery signals are emerging.
Averaging a 1.6% gain against the U.S. dollar, December is historically strong for the euro.
The ECB’s likely 25 basis points interest rate cut could support the eurozone economy in 2025.
Nigeria’s reforms and Europe’s challenges continue to influence the EUR/NGN exchange rate, with both short- and long-term impacts still unfolding.
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