On Tuesday, September 24, 2024, the Nigerian naira lost more value against the US dollar. It ended the day at N1,658.48 in the official Investor and Exporter (I&E) window.
This was a big drop of 6.13% from N1,562.66 on Monday. The naira fell past the N1,600 mark.
This happened because the Central Bank of Nigeria (CBN) decided to raise interest rates by 50 basis points. They did this to try to control inflation. But even with this news, the naira still dropped below N1,600.
Even though the naira was losing value, trading activity in the market went up a lot. The market turnover in the I&E window increased by 66%, from $100.21 million on Monday to $166.36 million on Tuesday.
Important Numbers
Closing Exchange Rate: The naira closed at N1,658.48 to the dollar on September 24. This was a 6.13% drop compared to N1,562.66 on September 23.
Intra-day Highs and Lows: On Monday, the naira moved a lot. It went as high as N1,682.00 for $1 and as low as N1,570.00 for $1 before finishing at N1,658.48.
Market Turnover: Market turnover in the I&E window jumped to $166.36 million on Tuesday, which is a 66% rise from $100.21 million on Monday.
But looking at the bigger picture, monthly turnover is going down. Total turnover for August was $3.3 billion, down from July’s $4.34 billion.
Parallel Market Rates: In the parallel market, the naira started at N1,661.07 to the dollar. It showed ups and downs all day, going from a high of N1,664.07 to a low of N1,560.00, and ended at N1,590.01.
Market Trends
Since mid-July, the naira has stayed between N1,500 and N1,600. It has been hard to keep it stable due to a lot of changes in the market.
So far this year, the naira has lost about 74% of its value. This is because of rising inflation and more people wanting foreign currency.
Even with these challenges, Nigeria’s external reserves slightly improved, going from $36.305 billion on August 30 to $36.730 billion by September 10.
Things to Know
- The CBN surprised everyone by raising interest rates by 50 basis points to 27.25%.
- The bank also raised 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 changes are meant to attract foreign investors because the US Federal Reserve recently cut its rates.
What to Expect
- The CBN’s interest rate hike could bring in foreign investors, which might help the naira’s value against the dollar.
- In the short term, the market might not be sure about these changes and could react in different ways.
- But if these measures work well, they could lower inflation, improve buying power, and make the naira stronger in the long run.