On October 4, 2024, the naira strengthened against the U.S. dollar, closing at N1,631.21 in Nigeria’s official Investor and Exporter (I&E) window, as global crude oil prices neared the $80 per barrel mark.
This represents a 1.69% rise compared to the previous day’s rate of N1,659.26, despite a significant reduction in market activity.
While the naira made slight gains, trading volume in the I&E window fell sharply to $238.36 million, a 47% drop from the $450.39 million recorded on October 3.
Key Highlights
- Closing Exchange Rate: On October 4, the naira settled at N1,631.21 to the dollar, up 1.69% from its previous close of N1,659.26.
- Intra-Day Movements: During the trading session, the naira fluctuated between a high of N1,679.00 and a low of N1,580.00 before closing at N1,631.21.
- Market Turnover: The I&E window’s total turnover dropped to $238.36 million, a sharp decline from $450.39 million the previous day. For comparison, September’s cumulative turnover reached $3.3 billion.
- Parallel Market: In the informal market, the naira opened at N1,669.49 per dollar, fluctuating between N1,673.34 and N1,618.00, before closing at N1,618.75.
Market Trends Throughout September, the naira experienced a bumpy ride, struggling to maintain stability amid volatile market conditions.
Having traded at around N1,300 per dollar in March, the currency faced increased pressure, especially in August when it hovered around N1,500. By the end of September, the naira had depreciated further.
Year to date, the naira has lost roughly 75% of its value, driven by rising inflation and increased demand for foreign exchange.
On a more positive note, Nigeria’s external reserves rose to $39.07 billion as of September 19, 2024, offering a hopeful sign that currency stabilization could be on the horizon.
What You Should Know Crude oil, a major pillar of Nigeria’s economy, began to show signs of recovery in October after experiencing lower prices in September.
Brent crude and Nigerian oil blends stabilized at around $77 per barrel in October, spurred by rising concerns over possible supply disruptions due to escalating tensions in the Middle East. As tensions between Iran and Israel intensified, fears of supply cuts have pushed oil futures higher, exerting upward pressure on global prices.
Outlook If global oil prices continue to rise, Nigeria, as a member of OPEC, could see increased revenues, which may help alleviate economic pressures and provide support for the naira.
Higher oil earnings could also bolster Nigeria’s foreign exchange reserves, improving market sentiment toward the naira. Additionally, if favorable macroeconomic policies are implemented and the U.S. dollar weakens on the global stage, the naira could be positioned for further gains.
