The Nigerian naira continued its slide against the US dollar, closing at N1,667.42 in the official Investor and Exporter (I&E) window on September 25, 2024.
This represents a 0.54% depreciation from the previous day’s close of N1,658.48, underscoring the currency’s ongoing struggles as it hovers in the 1,600 range.
However, the Central Bank of Nigeria (CBN) is working to stabilize the naira by selling an additional $20,000 to each Bureau De Change (BDC) at an official rate of N1,590 per dollar.
Key Data Points
Closing Exchange Rate: The naira concluded trading on September 25 at N1,667.42 per dollar, down 0.54% from N1,658.48 on September 24.
Intra-day Highs and Lows: The naira experienced significant fluctuations, trading between a high of N1,699/$1 and a low of N1,600/$1 before settling at N1,667.42.
Market Turnover: Market turnover in the I&E window dropped sharply to $100.47 million, marking a 39.60% decline from the $166.36 million recorded the previous day. August’s total turnover stood at $3.3 billion, a notable decrease from July’s $4.34 billion.
Parallel Market Rates: In the parallel market, the naira began the day at N1,597.98 to the dollar, fluctuating between a high of N1,674.00 and a low of N1,597.98 before closing at N1,653.27.
Market Trends
The naira has been battling to correct the depreciation that saw it breach the N1,600 mark in July, amidst significant market volatility.
Since then, it has fluctuated between N1,500 and N1,600, attempting to capitalize on moments of dollar weakness.
Year to date, the naira has depreciated by approximately 75%, pressured by soaring inflation and an increasing demand for foreign exchange.
However, there was a slight uptick in Nigeria’s external reserves, which rose from $36.305 billion at the end of August to $36.730 billion by mid-September.
What You Should Know
- The CBN has initiated the sale of another $20,000 to each BDC operator at N1,590/$1 as part of its broader strategy to ease the demand pressure on the naira.
- An announcement from the CBN stipulates that BDC operators can sell this foreign exchange to eligible end-users at a margin not exceeding 1% above the purchase rate.
- BDCs interested in participating must make naira payments to designated CBN deposit accounts.
What to Expect
- CBN’s decision to sell dollars to BDCs aims to reduce the pressure on the naira by making more foreign exchange available through formal channels, thereby cooling demand in the parallel market.
- The recent interest rate hikes, aimed at attracting foreign investment, may also support the naira in the coming weeks.
- Additional policy measures designed to stabilize the currency are anticipated, as the CBN works to curb the dollar demand and strengthen the naira.
