₦airaland Forum

Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, has revealed that the soon-to-be-introduced electronic FX matching system will address the disconnect between the current naira-to-dollar exchange rate and the naira’s true market value.

Speaking at the Bankers’ Committee Annual Dinner held on November 29, 2024, at Eko Hotel, Lagos, Cardoso emphasized that the system would enhance price discovery and restore stability to the foreign exchange (FX) market.

According to Cardoso, the naira’s current exchange rate reflects the actions of desperate buyers rather than genuine market dynamics.

“The current USD exchange rate reflects the price that the most desperate buyers are willing to pay, and this does not represent the true market value of the naira,” he said. The FX matching system, he noted, will correct these distortions, creating a more transparent and stable FX market.

Tackling FX Market distortions

The electronic FX matching system is part of broader efforts by the CBN to unify Nigeria’s exchange rate and eliminate market distortions.

Over the past year, the CBN has implemented significant reforms, including clearing outstanding foreign exchange obligations, which have bolstered confidence among businesses, particularly manufacturers and airlines.

“The introduction of the FX matching system will enable the Central Bank to monitor the market more effectively and intervene where necessary. This will significantly improve transparency and provide a more accurate reflection of the naira’s value,” Cardoso stated.

Countering disinformation

Cardoso also addressed concerns over the widespread narrative of a persistent demand-supply gap in the FX market, which he believes is fueling unnecessary panic. He emphasized that such disinformation has distorted perceptions of the FX market’s true state.

“Disinformation about a supposed demand-supply gap has created panic that is unwarranted. The FX matching system will help put an end to this by ensuring that rates reflect actual market activity,” he explained.

The governor further reassured stakeholders that these measures will create a more functional FX market where businesses and individuals can operate with confidence.

Role of Banks in stabilizing the FX Market

Cardoso highlighted the critical role that Nigerian banks must play in ensuring the success of the FX reforms. He pointed out that a well-functioning FX market cannot rely solely on the Central Bank’s periodic interventions.

“An FX market defined solely by when and how the Central Bank buys or sells dollars is inadequate for the needs of a dynamic economy like Nigeria’s. Now is the time for banks to step up to their intermediation and market-making responsibilities,” Cardoso stated.

He urged financial institutions to actively provide tailored solutions to businesses and individuals, enabling them to manage risks and meet their operational needs effectively.

Strengthening Market Confidence

- With the rollout of the electronic FX matching system, the CBN aims to foster greater stability and predictability in the FX market.

- By addressing speculative distortions and ensuring that exchange rates are driven by real demand and supply, the naira is expected to better reflect its true value.

- Cardoso reiterated the CBN’s commitment to maintaining price stability and creating a policy environment conducive to economic growth.

- He expressed optimism that the new measures would restore confidence in Nigeria’s FX market and encourage long-term investments.

The FX matching system, which has been successfully implemented in other markets, is set to launch in the coming months, signalling a significant step toward achieving transparency and stability in Nigeria’s foreign exchange landscape.

Source: https://nairametrics.com/2024/11/29/cbn-governor-says-fx-matching-system-will-correct-nairas-true-value/

I like this Cardoso guy.

How will the matching system work? Will the regulators circumvent it by collusion?

Toh

We are expecting the results

This wéréy just want to build another FX matching website for 100 billion to embezzle.

It's business as usual....once u are in..chop your own before 4 years end

The CBN Governor is making sense.

Just plenty talk...no substance, no evidence

Clueless CBN

advanceDNA:
This wéréy just want to build another FX matching website for 100 billion to embezzle.

It's business as usual....once u are in..chop your own before 4 years end

Backwardness is a diseases

round headed confused governor

doing trial and error with people's tummy

Show workings

Our economy has been mismanaged for far too long for some of these policies to work effectively

The average Nigerian is desperately in need of help.

Another way to make some people very rich. Why not use the Dubai template. Nigerians are allowed to carry too much dollars. Most countries had digitalized forex but not here.

tundegan:
I like this Cardoso guy.

Shut up

richeeyo:
Backwardness is a diseases

The truth is the only way the true naira value can be determined is if the CBN is sincere is advising the government to ensure that the earnings increases. You cannot have low earning potential and you keep doing tumbo tumbo with the monetary policies whereas the fiscal side is BS.
Until the CBN and Finance ministry address this, the issue will still remain the same.

tundegan:
I like this Cardoso guy.

What about a clueless guy who has run the naira down is likeable
Na tribalism go kii una and that yeye country.

My own question is why do the banks sell way below the official rate?

That's why a large proportion of Nigerians still use the bdcs

The bots again!.


Allocating likes to themselves. The same person!.

Seun fix up nairaland!. It’s going down!.

trutharena:
The CBN Governor is making sense.

He is using policies that traditionally work in a formal economy, forgetting that Nigeria is a semi formal economy, as most businesses are informal. So not addressing the fiscal aspect of the economy and doing chess moves with monetary policies like someone who is solving a newtonian fluid equation and he is not sure of what he is doing, will not help resolve the value of the naira or ensure FX stability.
To resolve FX stability, eliminate the corruption in the FX market especially with the ease at which the governors change money to dollars every allocation period and also ensure that all money transfer operators deposit all the dollars they get into a Nigerian bank account and not trade offshore. Then you will see sanity in the market.

[b][/b]

laceblaze:
Hello everyone, please 🙏 IBTC bank just sent me a message,-'loan paid down,letter of discharge not sent'. Please house what does it mean, I am not owing Ibtc any money.thanks

Hello everyone, please 🙏 IBTC bank just sent me a message,-'loan paid down,letter of discharge not sent'. Please house what does it mean, I am not owing Ibtc any money.thanks

Too much talks.... Less actions

danzaki63:
Another way to make some people very rich. Why not use the Dubai template. Nigerians are allowed to carry too much dollars. Most countries had digitalized forex but not here.

How did dubai digitalized forex?

Dubai wey dey change money physically pass Nigeria

Sincerely, they tried a lot of things by trial and error. Year 2 is about to clock. They are yet to find their feet and true direction

Why waste money on what AbokiFX was doing for free?

I didn’t know things were this bad until I tried to renew a subscription in USD. We’re in trouble

And 10,000 naira to 1 dollar is the true value.

Banks are buying cheap from CBN then sell to BDS for gain. The reason they will tell you dey don't have dollars.

Dollar must be digitized in Nigeria. Nobody should be allowed walking within Nigeria with dollars. If you have, you must show your airplane ticket going out of Nigeria in 4 days time. If not get them arrested.

Believeintruth:
The truth is the only way the true naira value can be determined is if the CBN is sincere is advising the government to ensure that the earnings increases. You cannot have low earning potential and you keep doing tumbo tumbo with the monetary policies whereas the fiscal side is BS.
Until the CBN and Finance ministry address this, the issue will still remain the same.

That would mean stepping lots of Nigerians to the Middle class, government is not interested

Grandstar
It seems the CBN gov has now admitted that the floating experiment has failed. One of the claims for floating was that it will enable us get the true value of naira. It seems after all is said and done, it is now obvious there's no true value anywhere.
The fx matching system is another euphemism for defending the naira

SACK THE CBN GOVERNOR NOW!!!!
SACK CARDOSO NOW!!!

The man seems to have forgotten that he is the CBN governor. He talks and behaves like an analyst!

What is electronic FX matching system

An Electronic FX Matching System is a computerized platform that facilitates the matching of foreign exchange (FX) trades between buyers and sellers. Here's a breakdown:

*Key Components*

1. *Electronic Trading Platform*: A digital platform that enables participants to submit FX trade orders.
2. *Matching Engine*: A sophisticated algorithm that matches buy and sell orders based on price, quantity, and other criteria.
3. *Order Management System*: A system that manages and prioritizes trade orders, ensuring that they are executed efficiently and accurately.

*How it Works*

1. *Order Submission*: Participants submit FX trade orders (buy or sell) through the electronic trading platform.
2. *Order Matching*: The matching engine analyzes the orders and matches them based on price, quantity, and other criteria.
3. *Trade Execution*: Once a match is found, the trade is executed, and the parties are notified.
4. *Settlement*: The trade is settled, and the exchange of currencies takes place.

*Benefits*

1. *Increased Efficiency*: Electronic FX matching systems automate the trading process, reducing manual errors and increasing efficiency.
2. *Improved Transparency*: The system provides real-time price information, enabling participants to make informed trading decisions.
3. *Reduced Costs*: Electronic trading reduces the need for intermediaries, resulting in lower transaction costs.
4. *Enhanced Liquidity*: The system attracts a large number of participants, increasing liquidity and reducing price volatility.

*Examples*

1. *EBS (Electronic Broking Services)*: A leading electronic FX trading platform.
2. *Reuters Dealing*: A popular electronic FX trading system.
3. *Bloomberg FXGO*: A electronic FX trading platform for institutional investors.

Electronic FX matching systems have revolutionized the foreign exchange market, enabling faster, more efficient, and more transparent trading.



Examples of country that is using electronic FX matching system


Here are some examples of countries that use electronic FX matching systems:

1. *United States*: The US uses various electronic FX trading platforms, including EBS, Reuters Dealing, and Bloomberg FXGO.
2. *United Kingdom*: The UK is home to several major electronic FX trading platforms, including EBS, Reuters Dealing, and ICAP.
3. *Japan*: Japan uses electronic FX trading platforms, such as EBS, Reuters Dealing, and Bloomberg FXGO.
4. *Singapore*: Singapore is a major FX trading hub and uses electronic FX trading platforms, including EBS, Reuters Dealing, and Bloomberg FXGO.
5. *Australia*: Australia uses electronic FX trading platforms, such as EBS, Reuters Dealing, and Bloomberg FXGO.
6. *Canada*: Canada uses electronic FX trading platforms, including EBS, Reuters Dealing, and Bloomberg FXGO.
7. *Germany*: Germany uses electronic FX trading platforms, such as EBS, Reuters Dealing, and Bloomberg FXGO.
8. *France*: France uses electronic FX trading platforms, including EBS, Reuters Dealing, and Bloomberg FXGO.
9. *China*: China uses electronic FX trading platforms, such as the China Foreign Exchange Trading System (CFETS).
10. *India*: India uses electronic FX trading platforms, such as the Indian Rupee-US Dollar (INR-USD) trading platform.

These countries are not exhaustive, and many other countries use electronic FX matching systems to facilitate foreign exchange trading.