The naira ended 2024 at an exchange rate of N1,535/$1, reflecting a 40.9% depreciation compared to its closing value of N907.11/$1 at the end of 2023. This decline follows a 49.1% devaluation recorded the previous year. In the parallel market, where the exchange rate is sold unofficially, the naira weakened further, closing at N1,660/$1, a 26.8% depreciation from the N1,215/$1 rate recorded in 2023. Official exchange rates, including the NFEM rate and weighted average, concluded the year at N1,535.8 and N1,536.5, respectively.
Despite this significant depreciation, the naira’s value remained relatively stable within a 5-10% range throughout the year compared to its January 2024 rate of N1,455/$1. Meanwhile, Nigeria’s external reserves saw a notable improvement, growing by 24% to $40.8 billion by December 30, 2024, from $32.9 billion at the end of 2023. This growth reflects increased forex inflows and targeted interventions by the Central Bank of Nigeria (CBN).
The year was marked by significant foreign exchange policies aimed at stabilizing the naira and addressing forex liquidity challenges. Early in the year, the CBN Governor, Yemi Cardoso, emphasized that the naira was undervalued and introduced measures to achieve genuine price discovery. In January, the naira appreciated to N1,455.59/$1 following CBN crackdowns on forex speculation and partial resolution of airlines’ FX claims.
By February, the CBN discontinued the ±2.5% cap on interbank FX transactions, signaling a shift toward a free-floating exchange rate. Around the same time, the Economic and Financial Crimes Commission (EFCC) intensified efforts to curb dollar hoarding and naira mutilation. In March, the Federal Government fined Binance $10 billion for forex violations, while the CBN revoked the licenses of over 4,000 Bureau De Change (BDC) operators in a bid to tighten forex management. These actions contributed to the naira’s best monthly performance in five years.
However, the momentum waned by April as the naira depreciated by 5.8% following an initial rebound to N980/$1 in the BDC segment. The CBN banned the use of foreign currency collateral for naira loans and established a remittance task force to enhance forex inflows. By mid-year, the CBN raised the capital requirement for BDCs to ₦2 billion, giving operators six months to comply. Despite these interventions, forex shortages persisted, with the naira closing May at N1,485.99/$1 and sliding further to N1,611/$1 by July.
In efforts to boost liquidity, the CBN reintroduced retail Dutch auctions in August and launched a $500 million domestic dollar bond. By November, the Federal Government introduced a nine-month window allowing Nigerians to deposit undisclosed foreign currencies in banks to improve forex inflows. Concurrently, the CBN approved the trading of idle FX deposits from domiciliary accounts and implemented new trading guidelines, including a $100,000 minimum trade mandate.
To address valuation challenges, the CBN introduced an FX matching system while revising forex market rules in December. New guidelines allowed BDCs to purchase up to $25,000 weekly from the NFEM. Despite these interventions, the naira ended the year as one of the worst-performing currencies in Sub-Saharan Africa, underscoring the persistent challenges in achieving forex stability.
