Naira faces mixed fortunes as 2024 draws to a close

As 2024 edges toward its end, the Nigerian currency, the naira, recorded mixed performances across various exchange markets on Monday, December 30.

According to data from FMDQ, the naira depreciated marginally against the U.S. dollar, trading at ₦1,538.55/$1, down from ₦1,534/$1 recorded on Friday, December 27. This represents a slight loss of ₦4.55 against the dollar within the period.

In the parallel market, often referred to as the black market, the naira shed ₦10, trading at ₦1,660/$1, compared to ₦1,650/$1 previously.

Despite the weakening against the dollar, the naira showed strength against some other major currencies. It appreciated by ₦30 against the British pound, trading at ₦2,130/£1, compared to ₦2,160/£1 the previous day.

The currency also gained ₦10 against the euro, closing at ₦1,720/€1, up from ₦1,730/€1. Meanwhile, the naira remained steady against the Canadian dollar, holding firm at ₦1,280/CA$1.

Economic analysts suggest that the naira’s mixed performance reflects both domestic and international pressures.

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Dr. Adeolu Adesanya, a financial economist, attributed the naira’s depreciation against the dollar to sustained demand for foreign exchange during the holiday season. “The end-of-year surge in importation and travel often creates a higher demand for dollars, putting pressure on the naira,” he explained.

However, the naira’s gains against the euro and the British pound could indicate shifts in global currency dynamics.

According to Dr. Sarah Umeh, an expert in international trade, “The eurozone and UK economies have been experiencing moderate fluctuations in their currencies due to geopolitical and economic uncertainties. This creates an opportunity for emerging markets like Nigeria to leverage their own currency’s relative stability in certain areas.”

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As the New Year approaches, experts are urging policymakers to focus on strategies to stabilize the naira. One suggested approach is addressing inflationary pressures and improving Nigeria’s foreign exchange reserves.

“Nigeria must prioritize policies that bolster investor confidence and attract foreign direct investment. This will reduce dependency on the black market and stabilize the official exchange rate,” noted Bayo Ajibade, a currency trader in Lagos.

READ ALSO: Naira strengthens against major currencies ahead of festive season

With the naira showing mixed performance at year-end, the Central Bank of Nigeria (CBN) faces mounting pressure to review its monetary policies. As Dr. Umeh concluded, “2025 will be critical for Nigeria.

The naira’s trajectory will depend on a combination of global market trends, domestic fiscal discipline, and robust economic reforms.”

The coming months will reveal whether the naira can hold steady or face further challenges in its quest for stability in an ever-evolving global economic landscape.