The official exchange rate between the Nigerian naira and the US dollar closed 2024 at 1,535 naira to the dollar (N1,535/$), according to data from the Central Bank of Nigeria (CBN). That’s a drop of 41%.
The closing value of the naira at the end of 2024 marks a depreciation of 40.9% compared to the official rate at the end of 2023, which stood at 907.11 naira to the dollar (N907.11/$).
Data analysis reveals that this significant fall occurred despite the CBN introducing several foreign exchange market reforms aimed at improving transparency and attracting foreign investors.
Among these reforms were the unification of foreign exchange windows under the Nigeria Foreign Exchange Market and the establishment of the Nigerian FX Code, mandating ethical governance and responsible behaviors among market participants.
On the parallel market, where the naira is traded unofficially, the currency traded at 1,660 naira to the dollar (N1,660/$) at the end of 2024, a depreciation of 26.8% per dollar. compared to the rate of 1,215 naira to the dollar (N1,215/$) recorded at the close of 2023.
During 2024, the CBN has intensified its market-oriented policies to stabilize the foreign exchange sector and encourage foreign investment.
The central bank also announced that it had cleared all valid foreign exchange arrears, fulfilling a key commitment made by Governor Olayemi Cardoso regarding the $7 billion in inherited unpaid debts.
In May 2024, the CBN issued revised guidelines to strengthen the operations of Bureaux de Change (BDCs) in Nigeria.
These guidelines define permitted activities for BDCs, such as purchasing foreign currency from specified entities and selling foreign currency for purposes such as personal and business travel allowances.
Furthermore, the CBN has automated foreign exchange transactions, replacing the traditional over-the-counter system, to improve market efficiency and supervision.
According to an analysis by Punch newspaper, despite these interventions, the naira has come under immense pressure due to limited foreign exchange flows, the growing gap between official and parallel rates, as well as the lingering effects of capital flight foreign investors.
The newspaper adds that the World Bank has listed the naira among the worst performing currencies in sub-Saharan Africa in 2024.
GIK/lb/Sf/te/APA
