The Nigerian Naira is bouncing back this month after a surge in supply in September. This rebound is a welcome relief, especially considering the challenges the currency faced in recent times.
The Central Bank of Nigeria (CBN) announced it sold $543.5 million to authorized dealer banks between September 6 and September 30.
The sale of FX to bank dealers had positive effects on Niara’s performance in the official market.
The Naira closed at N1,541 in September 2024 on the official NAFEM window, showing a slight improvement compared to its performance in July and August 2024. However, in the parallel market, the Naira fell to its lowest point in seven months, closing at N1,700/$—its weakest level since February 2024.
The Central Bank of Nigeria (CBN) has been working to stabilize the economy, and analysts believe their efforts seem to be paying off.
The Naira’s rebound is also attributed to stability in the foreign exchange market, and improved fiscal receipts from increased oil production and prices.
The CBN’s efforts to stabilize the foreign exchange market have helped reduce volatility and increase investor confidence.
Overall, the Naira’s rebound is a positive sign for the Nigerian economy, and the CBN’s continued support will be crucial in maintaining this momentum.
The naira gained against the U.S. dollar on Friday October 5, closing at N1,631.21 in the official Investor and Exporter (I&E) window, as global crude oil prices eye $80 per barrel.
This marked a modest 1.69 percent appreciation compared to the previous day’s exchange rate of N1,659.26, despite a sharp decrease in market turnover. Throughout the trading session, the naira fluctuated, reaching a high of N1,679.00 and a low of N1,580.00 before ending at its final rate of N1,631.21.
The naira’s slight improvement came as trading volume in the I&E window dropped to $238.36 million, reflecting a significant 47 percent decline from the $450.39 million registered the previous day.
September marked the Naira’s strongest performance since June 2024, when it closed at N1,505/$ on the official window. In July, the Naira ended at N1,608/$ on the official market and N1,600/$ in the parallel market. A similar trend followed in August, with the Naira closing at N1,598/$ on the official market and N1,616/$ on the parallel market.
Meanwhile, the Central Bank of Nigeria (CBN) plans to introduce an electronic matching system for foreign exchange transactions in the Nigerian FX market, set to commence on December 1, 2024.
The apex bank stated that it will publish real-time prices and work in collaboration with the FMDA to establish rules for the operation of EFEMS.
According to a statement from Omolara Duke, Director of the Financial Markets Department at the CBN, the sales occurred over 11 dealing days through a two-way quote at the Nigeria Foreign Exchange Market (NFEM).
She explained that the spot sales aimed to mitigate market volatility driven by high demand for commodity imports and seasonal foreign exchange needs.
The statement, “The Central Bank of Nigeria (CBN) sold a total of US$543.5 million (Five Hundred and Forty-Three Million, Five Hundred Thousand US Dollars Only) from September 06-30, 2024, to Authorized Dealer banks through two-way quotes at the Nigerian Foreign Exchange Market (NFEM) on 11 dealing days.”
“The FX spot sales were to reduce observed market volatility driven by high demand for commodity importation and seasonal demand for FX. The value dates for all the transactions were T+2.”
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