In August 2024, foreign exchange turnover through Nigeria’s Autonomous Foreign Exchange Market surged to N15.74 trillion ($9.90 billion), a 33.88% increase from the previous month.
This boost in trading was driven by increased transactions in government bonds and Treasury bills.
Additionally, foreign inflows into Nigeria rose to $585 million in August, contributing to stronger market activity. However, the naira continued to weaken, trading at N1,658 to the U.S. dollar in the official market, with black market rates reaching N1,700.
Despite increased trading, the naira’s depreciation has led to higher exchange rate volatility, highlighting the challenges facing the currency amidst economic pressures like inflation.
The Central Bank of Nigeria (CBN) auctioned $876.26 million to end users through commercial banks to stabilize the naira, which temporarily improved its value.
CBN Governor Olayemi Cardoso emphasized that fixing Nigeria’s exchange rate issues requires addressing underlying economic fundamentals, such as boosting non-oil exports and diversifying the economy.
Governor Cardoso pointed out that Nigeria’s external reserves had increased to $39.07 billion by mid-September 2024, reflecting a 17.4% rise from the same period in 2023.
He warned that achieving a stable exchange rate would remain difficult unless the country reduces its reliance on oil exports and embraces broader economic reforms, including import substitution and increased local production.
(Punch)