Dollar Strengthens as Naira Ranks Among Worst-Performing After Losing Over 70% in 2024

• In just two weeks, Nigeria's local currency saw its largest fall, plunging to a record low
• This followed a decline in dollar liquidity in the foreign exchange market to $81 million
• According to a report, the biggest producer of crude in Africa has had difficulty stabilising its currency

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

Following a sharp decline in dollar liquidity in the foreign exchange market, Nigeria's local currency had its biggest decline in about two weeks, reaching a record low.

According to data provided by Bloomberg, the naira fell 4.3% against the dollar on Monday, the biggest since October 15.

FMDQ data showed that the local currency closed at N1,670 to the dollar on Monday, October 28th, 2024.

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Bloomberg reported that the decline came when dollar liquidity fell 72% to $81 million, the lowest level in almost a month.

As the West African country focuses on increasing its reserves, which on October 24 reached their highest level in around two years at 39.4 billion dollars, liquidity in the foreign exchange market has remained low.

Since it was let to freely trade against the dollar in June of last year, the biggest producer of crude in Africa has had difficulty stabilizing its currency.

The naira has lost over 70% of its value in relation to the dollar, making it the third-worst performing currency globally this year, after the Ethiopian Birr and the Lebanese Pound.

Charles Abuede, a financial analyst opined that the onus lies on the monetary and fiscal authorities to put in place friendly policies to aid the management of the fx market.

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He noted,

"In saying all these, one thing is major and should be dealt with; crude oil production. If Nigeria can address insecurity and terrorism concerns, oil theft and pipeline vandalism, we can begin to see an increase in our crude oil production to above 2mbpd or even close to 2.5mbpd to aid the increase in fx receipt."

Dollar inflows hit $57 billion monthly

Legit.ng reported that the Central Bank of Nigeria (CBN) has disclosed that foreign exchange inflows into Nigeria hit $57 billion in August 2024.

Muhammad Abdullahi, CBN’s Deputy Director of Economic Policy, updated the audience on Nigeria’s forex situation in Washington, D.C.

Abdullahi stated that capital importation almost doubled to $6.9 billion in August this year, compared to $3.9 billion recorded during the 2023 financial year.

Source: Legit.ng