The naira strengthened against the US dollar on September 27, 2024, closing at N1,540.78 in the official Investor and Exporter (I&E) window.
This represents a 2.24% increase from the previous day’s closing rate of N1,576.10, as the naira seeks stability against the dollar.
However, market turnover dropped significantly, declining by 36% from $334.05 million on Thursday to $212.31 million on Friday.
Key Data Points
Closing Exchange Rate: The naira concluded trading on September 27 at N1,540.78 per dollar, reflecting a notable gain of 2.24% from the N1,576.10 recorded the previous day.
Intra-day Highs and Lows: During the trading session, the naira exhibited volatility, reaching a high of N1,691.00 and a low of N1,530.00 before settling at N1,540.78.
Market Turnover: Turnover in the I&E window fell to $212.31 million, down from $334.05 million the day before. For context, total turnover for August was $3.3 billion, down from July’s $4.34 billion.
Parallel Market Rates: In the parallel market, the naira opened at N1,668.49 against the dollar, fluctuating between a high of N1,669.50 and a low of N1,643.04, before closing at N1,668.49.
Market Trends
Since dropping below the N1,600 mark in July, the naira has faced significant challenges amid market volatility, flickering between N1,500 and N1,600 as it navigates opportunities during periods of dollar weakness.
Year to date, the naira has depreciated by approximately 75%, driven largely by rising inflation and demand for foreign currency.
Nonetheless, Nigeria’s external reserves have shown a slight improvement, increasing from $36.305 billion at the end of August to $36.730 billion by mid-September.
What You Should Know
Recently, the federal government announced that ExxonMobil plans to invest $10 billion in Nigeria’s offshore oil operations.
Additionally, the Central Bank of Nigeria (CBN) has begun selling an extra $20,000 to each Bureau de Change (BDC) operator at an exchange rate of N1,590 per dollar.
This initiative is part of a broader strategy to ease demand pressure on the naira. According to CBN guidelines, BDC operators can sell this foreign exchange to eligible end-users at a margin not exceeding 1% above the purchase rate.
What to Expect
- ExxonMobil’s investment plans signal a positive shift in the economic landscape, potentially boosting sentiment and encouraging major currency players to adopt a more optimistic outlook on the naira in the long term.
- Furthermore, the CBN’s initiative to distribute dollars to BDCs aims to stabilize the naira by enhancing foreign exchange availability.
- This strategy is expected to alleviate pressures in the parallel market, fostering a more balanced currency environment.