“Naira closes at ₦1,537/$1, weakest pre-Xmas day charge ever

The change charge between the naira and the greenback closed at N1,537/$1 on Christmas Eve, gaining one naira from yesterday’s shut of N1,538/$1.

This marks the official change charge getting into Christmas at its lowest stage in historical past, surpassing the N885.88/$1 change charge recorded on December 22, 2023, which was beforehand the worst in historical past.

The forex has due to this fact weakened by a staggering 42% over the previous yr, pushed by a number of macroeconomic headwinds skilled all year long.

What the information is saying

Knowledge from the Central Bank change charge portal reveals that the naira closed at N1,537/$1 on Tuesday as companies wrapped up earlier forward of the Christmas celebration.

The intraday excessive and low recorded in the course of the day have been N1,545 and N1,533 to the greenback, respectively, in comparison with N1,545 and N1,532 recorded yesterday.

• In the meantime, the NFEM charge for the day closed at N1,538.57/$1 in comparison with N1,535/$1 recorded a day earlier, whereas the straightforward common charge stood at N1,539/$1 in comparison with N1,537/$1 yesterday.
• The Central Bank has but to start publishing the amount of foreign exchange traded in the course of the day.
• The change charge has appreciated by 8% month-to-date for the reason that Central Bank launched the brand new international change buying and selling mechanism, EFEMS.
• On the parallel market, the place the change charge is traded unofficially, the speed averaged between N1,650 and N1,655 to the greenback.

The parallel market charge has stabilized in current days, following vital volatility earlier within the month when it exceeded N1,700 towards the greenback.

The central bank not too long ago granted Bureau de Change (BDC) operators non permanent permission to buy as much as $25,000 weekly in international change (FX) from the Nigerian International Change Market (NFEM).

One other directive was issued informing Nigerians trying to journey overseas that they will buy {dollars} as private or enterprise journey allowances through their business banks.

Weakest day charge

The naira’s efficiency on the shut of buying and selling on the final working day earlier than Christmas units a brand new low in its historical past, reflecting the broader financial challenges Nigeria has confronted in 2024.

• Regardless of the marginal enchancment from yesterday’s charge, the closing charge of N1,537/$1 highlights a stark depreciation of 42% year-on-year, making it the weakest official change charge ever recorded for this era.
• The depreciation highlights the numerous macroeconomic headwinds of the yr, together with persistent inflationary pressures, fiscal imbalances, and the challenges of touchdown on the best change charge coverage following a transfer to a versatile charge.
• The CBN lastly launched the brand new EFEMS buying and selling mechanism which has helped introduce transparency into the forex market.
• Whereas the brand new mechanism has seen some success in stabilizing charges month-to-date with an 8% appreciation, the broader image reveals deep-seated structural points inside Nigeria’s international change market.

The parallel market, lengthy thought-about a barometer for true demand and provide dynamics, continues to commerce considerably increased, with charges stabilizing round N1,650–N1,655/$1.

This disparity between official and parallel market charges illustrates the continued inefficiencies and the pressing want for reforms to bridge the hole.

As Nigeria enters the festive season, the naira’s efficiency serves as a sobering reminder of the financial hurdles that have to be addressed within the coming yr to revive confidence within the forex and guarantee a extra sustainable change charge framework.