On October 15, 2024, the naira resumed its downward slide against the U.S. dollar, closing at N1658.97 in the official Investors and Exporters (I&E) window.
This came amid reports of rising inflation in Nigeria, which surged to 32.70% in September, up from 32.15% in August 2024—a 0.55% month-on-month increase.
The naira’s depreciation at the I&E window marks a 6.83% decline, as market turnover dropped significantly, according to data from the FMDQ exchange.
Daily turnover in the currency market fell sharply, from $343.71 million on the previous trading day to $217.86 million on October 14, representing a 57% decrease.
Key Data Points:
Closing Exchange Rate: On October 14, 2024, the naira ended the trading session at N1658.97 per dollar, marking a 6.38% depreciation from the previous day’s rate of N1,552.92.
Intra-Day Highs and Lows: The naira fluctuated throughout the session, peaking at N1,670.50 and hitting a low of N1,556.29 before settling at N1658.97.
Market Turnover: Market activity saw a significant downturn, with total traded volume in the I&E window falling to $217.86 million, compared to $343.71 million the previous day. For comparison, the total market turnover for September 2024 reached $3.3 billion.
Parallel Market Rates: The naira opened at N1,630.35 per dollar in the parallel market, oscillating between highs of N1,636.62 and lows of N1,630.35, before closing slightly higher at N1,634.66.
Market Trends:
Throughout 2024, the naira has faced relentless pressure, resulting in a sharp depreciation. Since January, the currency has lost more than 50% of its value, starting the year at N907.11 per dollar and surpassing N1,500/USD by October.
The first quarter of 2024 saw a steep fall, with the naira hitting a record low of N1,616.53 per dollar in February.
A brief respite in March saw the currency stabilize around N1,303 per dollar, but this recovery was short-lived. By early April, the naira had fallen below N1,100, reaching N1,002 mid-month.
The downward trend accelerated through the year, with the naira closing at N1,668.97 in September. October has so far been a period of continued volatility, with the naira struggling to find a stable footing.
What to Know
Adding to Nigeria’s currency woes is rising inflation, which reached 32.70% in September 2024—a year-on-year increase of 5.98 percentage points from the 26.72% recorded in September 2023.
In another development, Nigeria’s crude oil production—the country’s key revenue source—declined in September by 33,000 barrels per day to 1.405 million barrels per day, according to OPEC’s latest market report. This represents a drop from 1.438 million barrels per day recorded in August.
What to expect
- Despite these negative economic indicators, there is still some optimism that the naira could stabilize.
- A combination of favourable policy shifts and external factors, such as dollar weakness, might provide the necessary support for the naira to recover some ground.
- However, the currency’s path to recovery remains uncertain as inflation, falling oil production, and other structural issues continue to weigh heavily on the Nigerian economy.
