The Naira closed September 2024 at N1,541 per dollar on the official NAFEM window, showing slight improvement compared to July and August. However, on the parallel market, the Naira fell to its lowest value in seven months, closing at N1,700/$—its weakest since February 2024.
At the start of September, the official exchange rate stood at N1,585/$, meaning the Naira appreciated by 2.77% by the end of the month. The September performance was the strongest since June 2024, when it closed at N1,505/$ on the official market. In comparison, the Naira ended July at N1,608/$ on the official market and N1,600/$ in the parallel market. August closed similarly at N1,598/$ and N1,616/$ respectively.
FX Turnover and CBN Interventions
September saw the highest daily forex turnover since July 2024, with a peak of $334.05 million on September 26. This surge came a day after the Central Bank of Nigeria (CBN) announced plans to sell $20,000 to Bureau De Change (BDCs) at N1,590/$, allowing for a 1% profit margin. This intervention aimed to increase liquidity in the forex market, especially after turnover had dipped to just over $100 million the previous day, with the Naira trading at N1,667/$ on the official market.
Additionally, the CBN raised interest rates for the fifth consecutive time in September to stabilize the forex market. Beyond the 50 basis point increase in the Monetary Policy Rate (MPR), the bank aggressively tightened monetary policy, raising the Cash Reserve Ratio (CRR) for commercial banks by 500 basis points to 50% and for merchant banks by 200 basis points to 16%. This move was designed to curb the rising money supply, which impacts inflation and the foreign exchange market.
FAAC Allocation and Foreign Reserves
The CBN Governor highlighted the relationship between Federation Account Allocation Committee (FAAC) disbursements and foreign exchange demand pressures. The bank plans to monitor future FAAC allocations to assess their effect on exchange rates and prices.
Meanwhile, Nigeria’s foreign reserves increased by almost 5% in September, rising from $36.24 billion at the beginning of the month to $38.058 billion by September 30, 2024.
