Naira Weakens in Official Market, Loses 41% amid CBN Reforms
- The official exchange rate between the naira and the US dollar ended 2024 at N1,535/$, according to CBN
- This indicated a 40.9% depreciation during the year compared to the official rate at the end of 2023, which was N907.11/$
- The significant devaluation takes place at the same time that the CBN implements certain foreign exchange regulations
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Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
Data from the Central Bank of Nigeria has shown that the official exchange rate between the naira and the US dollar finished 2024 at N1,535/$.
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In comparison to the official rate at the end of 2023, which was N907.11/$, this represented a devaluation of 40.9% over the course of the year.
The notable devaluation coincides with the CBN's implementation of a number of foreign exchange rules meant to improve market transparency and draw in foreign investment.
The Nigerian FX Code, which required moral behaviour and good governance among market players, and the unification of FX windows under the Nigeria Foreign Exchange Market were two examples of these reforms.
At the end of 2024, the naira was worth N1,660/$ on the black market, where it is traded informally.
Compared to the N1,215/$ reported by the end of 2023, this indicates a depreciation of 26.8%.
In an effort to stabilize the foreign exchange market and draw in foreign investment, the CBN vigorously extended its market-friendly policies throughout the year.
In order to meet Governor Olayemi Cardoso's important pledge to settle the $7 billion in unpaid claims that were inherited, the CBN said this year that it had successfully cleared all legitimate FX backlogs.
To improve the operations of Bureaux de Change operators in Nigeria, the CBN released updated guidelines in May 2024, The Punch reported.
Permitted actions for BDCs are outlined in the guidelines, including selling foreign exchange for uses like business and personal travel allowances and obtaining foreign currency from designated businesses.
In order to improve market efficiency and accountability, the CBN replaced the over-the-counter approach with automated foreign exchange trading.
The direct sale of foreign exchange to BDCs at various points throughout the year was another significant involvement.
Although not very much, the apex bank also offered foreign exchange for sale on the official market.
Additionally, market players must adhere to the Nigerian FX Code, which was implemented in October and has strict compliance deadlines by the end of 2024.
Expert predicts naira stability in 2025
Legit.ng earlier reported that the naira-dollar exchange rate was expected to remain stable until 2025 after stabilising in the official foreign exchange (FX) market from July to December 2024.
Muda Yusuf, director and CEO of the Centre for the Promotion of Private Enterprise (CPPE), expressed this positive expectation in a 2024 economic review and a 2025 forecast.
The average rate was N907.1 in December 2023 and N1,455.59 in January 2024. By the end of the year, the official exchange rate at the Nigerian Foreign Exchange Market (NFEM) was N1,537.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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