Nigeria Economic Update, Issue 34

The naira rebounded against the U.S. dollar, gaining significant value this week, closing at N1,593.32/$1 in the official market.3 This improvement is linked to the recent settlement of a $500 million domestic dollar bond, which was fully subscribed by investors. The move injected confidence into the market and provided a brief cushion for the currency. On September 6, 2024, the Central Bank of Nigeria (CBN) took additional steps to ease pressure on the naira by approving the sale of $20,000 to each Bureau de Change (BDC) operator at a rate of N1580/$1. To stabilise exchange rates and meet the growing demand for invisible transactions, the CBN instructed the operators to maintain a margin of no more than 1%. This intervention comes after months of currency volatility that have put the naira under immense pressure, and by increasing liquidity in the market, the CBN aims to close the gap between official and parallel market rates, which has widened in recent weeks. This, if sustained, could temporarily boost the naira’s value and bring more stability to the foreign exchange market. However, to sustain the positive momentum and strengthen the naira over time, the government needs to implement a more holistic approach that goes beyond periodic interventions. Additionally, the government should intensify its efforts to attract foreign investment by fostering an enabling business environment with policies that promote stability, transparency and growth.

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