Banks and traders adjust exchange rates as the dollar plummets in the official window and foreign exchange reserves increase

The Nigerian currency, the Naira, experienced a reversal at the official foreign exchange window on Thursday, October 24, 2024.
Amid the reported increase in Nigeria’s foreign exchange reserves, the naira appreciated by almost 50 naira against the US dollar.
The local currency was trading at 1,601 naira to the dollar compared to 1,650 naira the previous day.

Legit.ng’s Pascal Oparada has reported on technology, energy, stocks, investments and the economy for more than a decade.

Amid Nigeria’s foreign reserves euphoria rising to 40.2 billion dollarsthe nigerian naira has recovered strongly against the US dollar in the official window.

The naira, which has fallen in the last three days, has seen a resurgence, gaining almost N50 on the Nigerian Autonomous Foreign Exchange Market (NAFEM).

Naira sees mixed fortunes in markets — The naira appreciates in the official window and plummets in the black market. Credit: Picture Alliance/Contributor
Source: Getty Images

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Data of the FMDQ Exchange shows that the naira rose by 3.20% to close at 1,601.20 naira per dollar on Thursday, October 24, 2024, against the N1,650 was negotiated on Wednesday, October 23, 2024.

Badge Traders quoted the dollar spot rate at a high of N1,696 per dollar and a low of N1,585.43, leaving a margin of N111.43.

Foreign exchange turnover at the official window also increased to $230.99 million on Thursday, October 24, 2024.

Naira depreciates in parallel market as reserves increase

However, on Wednesday, October 23, 2024, the naira depreciated massively in the parallel market to N1,739 per dollar.

Meanwhile, Nigeria’s foreign exchange reserves rose to $40.2 billion in October 2024, up from $38 billion recorded in September.

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, disclosed this during an investors meeting in Washington, DC, on Wednesday, October 23, 2024.

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FG explains why CBN does not intervene in naira

At the meeting, Nigerian Finance Minister Wale Edun said the inflows were organic due to the government’s decision not to defend the naira.

The minister highlighted the government’s commitment to maintaining transparency in the country’s foreign exchange reserves.

He assured investors that the government is committed to regularly updating Nigeria’s reserve position.

The minister reportedly explained that the decision to let the market determine the naira exchange rate instead of the Central Bank of Nigeria (CBN) defending it led to the organic growth of the country’s reserves.

He said that by allowing the market to determine the exchange rate, the government is working to boost investor confidence and create a cushion to stabilize the economy.

Reserve growth is organic

He revealed that the government aims to improve its foreign exchange supply organically without the intervention of the CBN, stating that the apex bank can still intervene in the market periodically.

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However, he said the ultimate goal is to achieve a stable exchange rate without relying on CBN interventions.

The minister highlighted the positive impact of foreign portfolio investment on the economy.

Experts call on FG to stabilize naira

The Finance Minister said Nigeria has witnessed increased investor confidence, with many willing to commit more resources to the Nigerian market.

Financial expert Janet Ogochukwu expressed hope that the Nigerian currency and the country’s reserves will continue to rise. The CBN should intensify its efforts to close the widening gap between the official and parallel exchange rate windows.

“The gap is too wide and will continue to cause volatility in the market.

At the current exchange rate, the spread is close to N200 to the dollar, frustrating the Nigerian government’s plan to unify rates,” he said.

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