The naira appreciated slightly against the U.S. dollar on October 3, 2024, closing at N1,659.26 in the official Investor and Exporter (I&E) window, amid a surge in market activity.
This marks a 0.59% increase from the previous day’s rate of N1,669.15 on October 2, 2024, as the Nigerian government advances a tax relief initiative for deep-water oil and gas projects, aiming to attract $5 to $10 billion in near-term investments.
As the naira saw a slight gain, market turnover surged to $450.39 million, marking a 155% increase from the $176.45 million recorded the previous day.
Key Data Points
Closing Exchange Rate: On October 3, the naira ended trading at N1,659.26 per dollar, marking a 0.59% gain from the previous close of N1,669.15.
Intra-Day Highs and Lows: The naira showed volatility during the session, reaching a high of N1,696.00 and a low of N1,601.48 before settling at N1,659.26.
Market Turnover: The I&E window saw a turnover surge to $450.39 million, up from $176.45 million the previous day. The total turnover for September reached $3.3 billion.
Parallel Market Rates: In the parallel market, the naira opened at N1,669.49 against the dollar, fluctuating between a high of N1,673.34 and a low of N1,645.00 before closing at N1,645.00.
Market Trends
In September, the naira’s price movements remained sluggish as it attempted to stabilize amid fluctuating market conditions. Since March, when the naira last traded at N1,300 per dollar, the currency has struggled to find balance.
While the naira hovered in the N1,500 range in August, it saw further depreciation in September. Year to date, the naira has depreciated by roughly 75%, a decline largely attributed to soaring inflation and increasing demand for foreign currency.
However, Nigeria’s external reserves saw a slight recovery, rising from $36.305 billion at the end of August to $36.730 billion by mid-September.
What to Know
The Nigerian government is targeting $5 to $10 billion in near-term investments in deep-water offshore operations through a recently introduced tax incentive package in the oil and gas sector.
These tax breaks include significant exemptions for compressed natural gas (CNG), diesel, and cooking gas, as well as fiscal incentives designed to boost investments in deep-offshore oil and gas projects.
What to Expect
- The federal government’s tax relief measures and VAT exemptions for deep-water oil and gas projects are expected to attract more investment into the sector.
- This increased investment is likely to boost production and export capacity, providing further support for the naira.
- Major developments such as these tax reliefs are expected to shift market sentiment positively toward the economy and the naira.