The exchange rate between the naira and the dollar ended the year at N1,535/$1 representing a 40.9% depreciation for 2024.
The official exchange rate between the naira and dollar closed in 2023 at N907.11/$1 thus depreciating by 40.9% for the year which compares to a 49.1% devaluation at the end of 2023.
Nigeria introduced several foreign exchange policies in 2024 as the central bank expanded on market-friendly forex policies to attract foreign investors.
Meanwhile, on the parallel market where the exchange rate is sold unofficially, the naira exchanged for N1,660 to the dollar when compared to N1,215/$ according to Nairametrics tracking records. This represents a 26.8% depreciation.
The NFEM rate and the weighted average rates both closed at N1535.8 and N1536.5 respectively.
Despite the 40.9% depreciation recorded during the year, the exchange rate has remained mostly within the 5-10% range when compared to the N1,45/$1 exchange rate recorded at the end of January 2024.
Data from the apex bank also shows the external reserves as of 30th December 2024 was $40.8 billion representing a 24% increase from the $32.9 billion it closed at the end of 2023.
Year of Forex policies
In 2024, the Central Bank of Nigeria (CBN) introduced several policies aimed at addressing forex challenges and stabilizing the Naira. Early in the year, CBN Governor Cardoso emphasized that the Naira was undervalued and called for genuine price discovery.
By January 31, the Naira appreciated to N1,455.59/$1, supported by CBN’s clampdown on forex speculation and partial clearance of airlines’ FX claims.
February saw further reforms, including the discontinuation of the ±2.5% cap on interbank FX transactions, signaling a gradual move towards a free-floating exchange rate. Additionally, the EFCC was tasked with curbing dollarization and Naira mutilation.
In March, the Federal Government fined Binance $10 billion for forex violations, while the CBN revoked the licenses of 4,173 Bureau De Change (BDC) operators to tighten forex management. The Naira rebounded significantly during the month, recording its best performance in five years.
However, April brought mixed results, with the Naira depreciating by 5.8% after an initial appreciation to N980/$1 at the BDCs. The CBN also banned foreign currency collateral for Naira loans and created a remittance task force to enhance inflows.
By mid-year, the CBN introduced new guidelines for BDCs, increasing the capital requirement to ₦2 billion and giving operators six months to comply. Despite these measures, forex challenges persisted, with the Naira closing May at N1,485.99/$1 and dropping further in July to N1,611/$1.
Efforts to boost forex liquidity continued with the reintroduction of RDAs and auctions in August, alongside increased remittance inflows and a $500 million domestic dollar bond issuance.
In November 2024, the Federal Government launched a nine-month window allowing Nigerians to deposit undisclosed foreign currencies in banks, as part of efforts to improve forex inflows.
Concurrently, the CBN granted banks approval to trade idle FX deposits from designated domiciliary accounts and introduced new FX trading guidelines, including a $100,000 minimum trade mandate. To further stabilize the forex market, Governor Cardoso unveiled an FX matching system designed to address the Naira’s valuation challenges.
CBN overhauled FX market rules and issued new guidelines, allowing BDCs to buy forex directly from authorized dealers.
The CBN also overhauled forex market rules in December and issued new guidelines, also permitting BDCs to purchase up to $25,000 weekly from NFEM.
Despite these interventions, the Naira remained one of the worst-performing currencies in Sub-Saharan Africa, reflecting the ongoing challenges in achieving forex stability.
