The naira closed the week on a positive trajectory, gaining N40.49 on a week-on-week basis in the official foreign exchange (FX) market despite a noticeable reduction in currency transaction volumes.
Data from the FMDQ Securities Exchange Limited shows that the Nigerian Autonomous Foreign Exchange Market (NAFEM) recorded a 2.5 percent appreciation in the naira’s value, with the dollar quoted at N1,600.78 on Friday, October 18, compared to N1,641.27 quoted the previous Friday. This appreciation marks a significant improvement over the course of the trading week.
On a day-on-day basis, the naira posted a 3.73 percent gain, equivalent to N59.71, closing at N1,600.78 on Friday from the N1,660.49 recorded on Thursday at NAFEM. The intraday high of the naira stood at N1,671.50 on Friday, only slightly lower than the N1,670 observed the day before. However, the currency’s intraday low saw some depreciation, reaching N1,592 on Friday, compared to N1,540 on Thursday.
Despite the naira’s week-on-week appreciation, market turnover within the official FX space experienced a significant dip. The total turnover declined by 43.13 percent, from $616.73 million on Friday, October 11 to $350.72 million on Friday, October 18. Nonetheless, on a daily basis, turnover saw a slight 6.2 percent increase, rising from $330.18 million on Thursday to $350.72 million on Friday.
In contrast to the official market’s performance, the parallel market, commonly referred to as the black market, was a different story. The naira lost 1.2 percent of its value on a week-on-week basis, with the dollar trading for N1,720 on Friday, compared to N1,700 since October 10, 2024.
The naira’s volatility comes amid broader concerns about its overall performance in 2024. The World Bank’s most recent Africa’s Pulse report identifies the naira as one of the worst-performing currencies in Sub-Saharan Africa this year. As of August 2024, the currency had depreciated by approximately 43 percent since the beginning of the year, placing it among the weakest regional currencies alongside the Ethiopian birr and the South Sudanese pound.
The World Bank’s report attributes the persistent pressure on the naira to heightened dollar demand driven by financial institutions, non-financial end-users, and money managers. Despite Nigeria’s efforts to stabilise the currency through reforms, including the liberalisation of the official exchange rate in June 2023, these measures have so far proven insufficient to restore balance to the foreign exchange market.
The recent developments highlight Nigeria’s ongoing struggle to navigate its complex currency environment. While gains in the official market reflect some positive momentum.
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