How the naira plummeted to an all-time low of N1,699 per dollar in the official market

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The Nigerian currency, the naira, plummeted to the lowest in history in the official market
On Wednesday, October 2, 2024, the naira plummeted, trading at N1,669.15 per dollar in the official market
The depreciation represents 8% at N127 against the US dollar in the foreign exchange market

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

During the first day of trading in October, the Nigerian currency, the naira, dropped to its lowest of N1,669.15 per dollar in the official market

Data from the FMDQ Exchange shows that the naira depreciated 8%, losing N127 against the US greenback.

The Naira plummets to an all-time low in the official market

On Wednesday, October 2, 2024, currency dealers quoted the naira at N1,669.15, marking an all-time low, compared to the N1,541.94 it traded on Monday, September 30, 2024, in the foreign exchange market.

The naira’s decline in value was due to a shortage of dollars from buyers and sellers.

Foreign exchange turnover at NAFEM dropped by 14.34% to $176.45 million on Wednesday, October 2, 2024, from the $181.86 million recorded on Monday, September 30, 2024.

Currency dealers quoted the dollar’s value at a high of N1,699 per dollar and a low of N1,550, lower than the N1,540 it traded on Monday, September 30, 2024.

However, in the parallel market, the naira appreciated by N10. Dealers quoted the dollar at N1,680 from N1,690 it traded on Monday, September 30, 2024.

CBN sells FX to dealers

Legit.ng earlier reported that the Central Bank of Nigeria (CBN) sold dollars to Bureau de Change (BDC) operators in September to ease the pressure on the local currency, giving the naira some breather.

All through September, the apex bank sold $20,000 twice to BDCs to meet the demand for FX.

According to reports, On September 6, 2024, the CBN sold FX to BDCs at N1,580 per dollar, and on September 25, 2024, the bank sold FX to sellers for N1,590 to reduce the pressure in the FX market and ensure adequate liquidity for smaller traders.

FX reserves rise to highest

Data from the CBN shows that Nigeria’s external reserves increased in 2024. As of September 27, 2024, reserves had surged by 15.26% yearly, amounting to $5.04 billion.

The addition pushed Nigeria’s total reserves to $38.06 billion, from $33.02 billion recorded at the beginning of 2024.

The growth shows a positive change in the apex bank's ability to defend the naira in the FX market, providing much-needed liquidity to sustain the country’s stability.

Money outside banks exceeds currency in circulation

Legit.ng earlier reported that data from the CBN shows that the total currency in circulation hit N4.14 trillion, with N3.87 trillion currently outside the Nigerian banking system.

The development shows that 93.34% of Nigeria’s currency is in the hands of Nigerians and businesses, while 6.66% is in the banking sector.

Despite efforts to drive financial inclusion and promote transactions, the development shows continuous challenges for Nigeria’s banking system.

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Source: Legit.ng

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