The exchange rate between the naira and the US dollar appreciated to N1,546.41 at the official Investor and Exporter (I&E) window on Friday, September 13, 2024, amid reports that the Dangote refinery is set to begin petrol distribution on Sunday.
The gain marks a 6.3% increase from the previous day’s rate of N1,649.76, as the Nigerian stock market also maintained upward momentum, driven by growing positive sentiment.
Despite ongoing volatility in the USD/NGN currency pair, the naira’s recent performance indicates renewed strength, as it returned to the 1,500 range.
Closing Exchange Rate: The naira closed at N1,546.41 on Friday, September 13, 2024, a 6.3% gain from Thursday’s close of N1,649.76.
While short-term volatility persists, market sentiment is increasingly favoring the naira.
Parallel Markets
In the parallel market, the naira appreciated to N1,614.20 on September 13, 2024, supported by positive sentiment. This reflects a 0.9% gain compared to the previous day’s close of N1,630.00.
The naira has been making efforts to recover from earlier declines, particularly from levels where it had previously weakened beyond N1,630.00 in July.
This recovery suggests that despite ongoing challenges, the currency is gradually regaining strength, as market participants respond positively to recent economic policies and announcements
Market Trends
Since mid-July, the naira has fluctuated between the N1,500 and N1,600 range, seeking stability amid market volatility.
After the I&E rate dropped to N1,649.00 on Thursday, the currency rebounded to N1,546.41 on Friday, aided by a bullish market outlook.
Although the naira has depreciated by about 76% year-to-date, largely due to inflation and increased dollar demand, it has shown resilience by climbing back into the N1,500 range.
As of July 2024, Nigeria’s external reserves stood at $34.66 billion.
What You Should Know
Dangote refinery will begin distributing petrol to NNPC on Sunday, according to the Minister of Economy, Wale Edun.
The Federal Executive Council (FEC) has approved the sale of crude oil to local refineries in naira, a move expected to reduce dollar demand and ease pressure on the naira.
Nigerian oil blends, known for their low sulfur content and high-grade light oil, continue to be in demand, currently trading at a premium over Brent crude.
What to Expect
- While the naira has experienced volatility, positive sentiment is likely to rise following the news of Dangote refinery’s petrol distribution.
- The sale of petroleum products to refineries in naira is expected to reduce demand for the dollar in oil markets.
- Moreover, the strong demand for Nigerian oil blends, which are selling at $75 per barrel compared to Brent’s $70, could further ease pressure on the naira.
- However, strategic economic decisions will be crucial in ensuring the naira’s continued recovery.
