The Nigerian Naira ended September 2024 in a poor state, reaching its lowest point in seven months in the parallel market. The currency ended at N1,700 per dollar, raising worries about the country’s economic health. This drop happened even though there was a small improvement in the official NAFEM window, where the Naira closed at N1,541, showing a 2.77% increase from its starting rate of N1,585 per dollar at the beginning of the month.
The Central Bank of Nigeria (CBN) stepped in to help the foreign exchange market by selling $20,000 to Bureau De Change (BDCs) at N1,590 per dollar, giving them a 1% profit to improve liquidity and stabilize the currency. Also, the CBN increased interest rates for the fifth time in a row to control inflation and stabilize the foreign exchange market, raising the Monetary Policy Rate (MPR) by 50 basis points.
Nigeria’s foreign reserves saw a big increase, rising by almost 5% to $38.058 billion by September 30, 2024. However, CBN noticed that when the Federation Account Allocation Committee (FAAC) gives out money, it can cause more demand for foreign currency, which might affect prices.
The drop in the Naira has worried economists, who think a 70% extra tax could slow down Nigeria’s growth. This development comes as Nigeria’s company income taxes dropped to N753.88 billion in the last quarter of 2022.
