On October 11, 2024, the naira lost value in relation to the US dollar, ending at N1,641.27 in the official Investor and Exporter (I&E) market, even if the price of crude oil futures remained higher than $79 per barrel.
Nigeria’s foreign exchange situation has changed, as seen by the naira’s 1.15% depreciation from the previous day’s rate of N1,622.57.
In the meantime, market turnover in the I&E window surged to $616.73 million, a 323% increase over the $145.56 million exchanged the day before.
Key Data Points
Closing Exchange Rate: On October 11, 2024, the naira closed at N1,641.27 per dollar, marking a 1.15% drop from the previous day’s rate of N1,622.57.
Intra-Day Highs and Lows: Throughout the session, the naira fluctuated, reaching a high of N1,675.00 and a low of N1,591.00, before settling at N1,641.27.
Market Turnover: Trading volume in the I&E window soared to $616.73 million, a notable jump from the previous day’s $145.56 million. For comparison, total turnover in September was $3.3 billion.
Parallel Market Rates: In the parallel market, the naira opened at N1,620.39 per dollar, with slight fluctuations. It peaked at N1,620.44, dipped to N1,620.39, and closed at N1,620.41.
Trends in the Market:
The persistent pressure on Nigeria’s exchange rate during 2024 has caused the naira to depreciate significantly.
Since January, the currency has lost more than 70% of its value; it began the year at N907.11/USD and by October, it had surpassed N1,500/USD.
The naira fell sharply in the first few months of 2024, reaching a record low of N1,616.53 per dollar in February. A modest rebound occurred in March when the value of the Naira hovered at N1,303 per dollar.
The naira only briefly recovered, though, as it dropped below N1,100 in the beginning of April and rose to N1,002 by the middle of the month.
The naira continued to fall after this brief period of stability, reaching N1,668.97 by the end of September.
What To Note
Nigeria is one of the top ten nations in the world impacted by food inflation, according to the World Bank. Nigeria was ranked third in Africa and the fifth most severely affected nation overall in its September report, behind Liberia and Malawi.
The Nigerian government has made it possible for petroleum marketers to purchase fuel directly from the Dangote refinery, eschewing the Nigerian National Petroleum Company Limited (NNPC). This is a different development.
In a statement made on Friday, Finance Minister Wale Edun—who also serves as the chair of the Naira-crude sale implementation committee—provided an update on the beginning of crude purchases and sales in naira.
Expectations
It is expected that the naira will appreciate, particularly if there are encouraging economic developments.
Positive changes in policy can strengthen the naira’s perception overall and offset detrimental factors like Nigeria’s rating for food inflation.
Furthermore, favorable macroeconomic changes or a declining value of the dollar could provide the naira the impetus it needs to rise.
