Naira slips to N1,667.42 as CBN injects more Dollars to stabilize currency

The Nigerian naira continued its downward trend against the US dollar, closing at N1,667.42 in the official Investor and Exporter (I&E) window on September 25, 2024.

This marks a 0.54% depreciation from the previous day’s close of N1,658.48, highlighting the currency’s ongoing challenges as it struggles to remain in the N1,600 range.

The Central Bank of Nigeria (CBN) is working to curb the naira’s decline by selling an additional $20,000 to each Bureau De Change (BDC) at an official rate of N1,590 per dollar.

This measure is part of a broader strategy aimed at easing the pressure on the naira by increasing the supply of foreign exchange through formal channels.

READ ALSO: Experts weigh in as Naira crashes to N1,658 after CBN rate hike

On September 25, the naira experienced significant volatility, with intra-day fluctuations ranging from a high of N1,699/$1 to a low of N1,600/$1, before closing at N1,667.42. Market turnover in the I&E window also dropped sharply to $100.47 million, a 39.60% decline from the $166.36 million recorded the previous day.

This decline in turnover reflects the ongoing challenges in the foreign exchange market, with August’s total turnover standing at $3.3 billion, down from $4.34 billion in July.

Meanwhile, in the parallel market, the naira traded between a high of N1,674.00 and a low of N1,597.98, closing at N1,653.27.

Since breaching the N1,600 mark in July, the currency has fluctuated between N1,500 and N1,600, reflecting ongoing market volatility as the naira attempts to regain stability amidst the economic headwinds.

Year-to-date, the naira has depreciated by roughly 75%, driven by high inflation and increased demand for foreign currency.

However, Nigeria’s external reserves showed a slight recovery, rising from $36.305 billion at the end of August to $36.730 billion by mid-September, offering a glimmer of hope for the currency.

READ ALSO: Naira drops to N1,544/$1 at official rate, stays stable in parallel market

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In a bid to relieve demand pressure, the CBN’s latest dollar injection to BDCs is expected to help moderate the demand for foreign exchange in the parallel market.

BDC operators are allowed to sell dollars to eligible end-users with a margin of no more than 1% above the purchase rate, with payments made into designated CBN accounts.

The CBN’s ongoing interventions, including recent interest rate hikes to attract foreign investment, aim to stabilize the naira.

Additional policy measures are expected in the coming weeks as the central bank continues its efforts to strengthen the currency and curb demand for the dollar.