The Naira closed September 2024 at N1,541 on the official NAFEM window, marking a modest improvement compared to July and August. However, the currency hit its weakest level in seven months on the parallel market, closing at N1,700/$.
At the start of September, the official exchange rate stood at N1,585/$, reflecting a 2.77% appreciation by month’s end. Nairalytics data shows that September’s performance was the strongest since June when the Naira closed at N1,505/$. In July, the official rate settled at N1,608/$, while the parallel market saw the currency trading at N1,600/$. August followed a similar trend, with the Naira closing at N1,598/$ officially and N1,616/$ in the parallel market.
FX Turnover and CBN Interventions:
Daily forex turnover in September hit its highest since July 11th, reaching $334.05 million on September 26th. This uptick followed the Central Bank of Nigeria’s (CBN) announcement to sell $20,000 to Bureau De Change (BDCs) at N1,590/$, offering a 1% profit margin. The intervention aimed to boost liquidity after FX turnover had dropped below $100 million earlier in the month, with the Naira trading at N1,667/$ on the official market.
In addition to selling dollars to BDCs, the CBN raised interest rates for the fifth consecutive time to stabilize the forex market. Along with a 50 basis point increase in the Monetary Policy Rate (MPR), the CBN tightened monetary policy by raising the Cash Reserve Ratio (CRR) for commercial banks by 500 basis points to 50%, and for merchant banks by 200 basis points to 16%. These moves aimed to curb the rising money supply, which the CBN cited as a key driver of inflation and FX instability.
CBN Governor noted the impact of the Federation Account Allocation Committee (FAAC) disbursements on FX demand pressures, indicating that future disbursements would be closely monitored for their effect on prices.
Foreign reserves saw a notable rise in September, growing by nearly 5% from $36.24 billion at the beginning of the month to $38.06 billion by the end of September 2024.
While the Naira showed slight improvements on the official market in September, challenges remain, especially with the currency’s ongoing weakness in the parallel market. CBN’s continued interventions and monitoring of key economic indicators will be crucial in shaping the Naira’s trajectory moving forward.
