The exchange rate between the naira and the US dollar appreciated N1,558.75 at the official Investor and Exporter (I&E) window on Wednesday, September 11, 2024.
This marks a 4.81% gain from the previous day’s rate of N1,637.59 as Nigerian oil blends trade at $75 above the Brent contract of $70.
The naira’s recent performance reflects positive market sentiment, pulling it back into the N1,500 range.
Key Data Points
Closing Exchange Rate: The naira closed at N1,558.75 on Wednesday, September 11, 2024, a 4.81% increase from Tuesday’s close of N1,637.59.
While short-term volatility persists, market sentiment is turning in favour of the naira.
Intra-day Highs and Lows: During trading today, the naira flickered to a high of N1,659.50/$1 and hit a low of N1,540.00/$1 before settling at N1,558.75.
Market Turnover: Wednesday’s market turnover reached $221.24 million, surpassing Tuesday’s $143.15 million.
In August 2024, total market turnover hit $3.25 billion, down from $4.34 billion in July, a decrease of $1.08 billion.
Parallel Market Rates
In the parallel market, exchange rates ranged between N1,655.00 and N1,645.00, staying slightly above the official I&E window rate.
Market Trends
Since mid-July, the naira has hovered around the N1,600 range, reaching as high as N1,660 before closing at N1,619 last Friday.
After appreciating at N1,580 on Monday, September 9, the currency closed above N1,630 on Tuesday. However, bullish sentiment helped the naira gain 4.8% by Wednesday, September 11.
Year-to-date, the naira has depreciated by around 76%, driven by inflationary pressures and rising dollar demand. Still, the currency has shown resilience, appreciating back into the N1,500 range.
Meanwhile, Nigeria’s external reserves stood at $34.66 billion as of July 2024.
What You Should Know
Nigerian crude oil is trading at about $75 per barrel as of Wednesday, compared to the previous day when oil prices dipped below $70 per barrel for the first time since December 2021. This was driven by concerns over global supply and demand.
Nigeria’s oil blends, known for their low sulfur content and high light oil grade, remain in demand among traders.
Brass River, Bonny Light, and Qua Iboe are all trading above $74.50 per barrel, outperforming the current Brent crude contract, which is at $70.00.
What to Expect
- Although the naira has faced volatility, a more optimistic outlook is emerging as global markets adjust.
- The strong demand for Nigerian oil blends, selling at $75 per barrel compared to Brent’s $70, could ease pressure on the naira.
- If oil prices remain steady or increase, the naira could continue to strengthen against the dollar, particularly if global economic conditions weaken the dollar.
- Strategic economic decisions will also play a crucial role in boosting the naira’s recovery.
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