The Naira closed September 2024 at N1,541 on the official NAFEM window, reflecting a slight improvement compared to its performance in July and August 2024.
In the parallel market, however, the Naira hit its lowest point in seven months, closing September at N1,700/$—the weakest level since February 2024.
At the start of September, the official exchange rate on the NAFEM window was N1,585/$, indicating a 2.77% appreciation by the end of the month.
Nairalytics data shows that September’s Naira performance was the strongest since June 2024 when it closed at N1,505/$ on the official window. In July, the Naira settled at N1,608/$ on the official market and N1,600/$ on the parallel market. August saw a similar trend, closing at N1,598/$ and N1,616/$ on the official and parallel markets, respectively.
FX turnover and CBN’s interventions
However, in terms of daily forex turnover, September saw the highest daily turnover since July 11th 2024 when daily forex turnover reached $348 million. On September 26th 2024, daily forex turnover stood at $334.05 million.
Coincidentally, the increase in trade volume on the 26th of September comes a day after the announcement by the Central Bank of Nigeria (CBN) to sell $20,000 to Bureau De Change (BDCs) at N1,590/$ providing for a profit margin of 1%.
The move by the CBN to sell dollars to BDCs was part of effort to provide additional liquidity in the forex market after FX turnover in the previous day fell to just over $100 million and the Naira traded at N1667/$ on the official market- the lowest point in the month under review.
Also, the apex bank raised interest rates for the fifth consecutive time during the month under review in a bid to bring stability to the forex market.
Beyond the 50 basis points increase in MPR, the bank was aggressive in monetary policy tightening raising CRR for commercial banks by 500 basis points to 50% while that of merchant banks was raised by 200 basis points to 16%. The move according to the CBN was to address the problem of rising money supply in the country and its impact on inflation and the FX market.
FAAC allocation and foreign reserve movement in the month
On the exchange rate, the Governor of the CBN alluded to a correlation between the monthly disbursement from the Federation Account Allocation Committee (FAAC) and FX demand pressures. He noted that going forward the bank will monitor future disbursement by the FAAC to determine its impact on prices.
Foreign reserves increased by almost 5% in the month of September rising from $36.24 billion at the beginning of the month to $38.058 billion by September 30th, 2024.