The official exchange rate between the naira and the US dollar closed 2024 at N1,535/$, marking a 40.9% depreciation compared to the 2023 year-end rate of N907.11/$, according to data from the Central Bank of Nigeria.
This significant slump occurred despite the introduction of several CBN policies aimed at fostering market transparency and attracting foreign investments.
Among these measures were the unification of foreign exchange windows under the Nigeria Foreign Exchange Market framework and the establishment of the Nigerian FX Code, which mandated ethical practices and governance for market participants.
On the parallel market, the naira’s value dropped to N1,660/$ by the end of 2024, reflecting a 26.8% depreciation from its 2023 close at N1,215/$.
Despite the apex bank’s aggressive expansion of market-friendly strategies, such as clearing all valid FX backlogs and automating currency trading to improve efficiency, the naira continued to face significant pressure.
CBN Governor Olayemi Cardoso announced the successful resolution of $7 billion in outstanding claims, a critical commitment aimed at stabilizing the market.
In May 2024, the CBN revised its guidelines for Bureaux de Change operators, specifying permissible activities like sourcing foreign currency and selling FX for Personal and Business Travel Allowances.
Temporary measures included allowing BDCs direct access to buy FX from authorized dealers, capped at $25,000 weekly during the festive period to address heightened demand.
Another key reform was the consolidation of all FX trading windows into a unified market, designed to enhance liquidity and transparency.
The Voluntary Disclosure and Repatriation Scheme, introduced to bolster foreign reserves, allowed individuals and businesses to deposit internationally tradable currencies into designated domiciliary accounts.
However, despite these interventions, the naira struggled under immense pressure due to limited FX inflows, a widening gap between official and parallel market rates, and capital flight by foreign investors.
The World Bank named the naira one of Sub-Saharan Africa’s worst-performing currencies in 2024, citing surging demand for dollars and delays in FX disbursements as contributing factors.
Efforts by the CBN, including direct FX sales to BDCs and the official market, were complemented by the introduction of the Nigerian FX Code in October, which set mandatory compliance deadlines for market participants by the end of the year.
While President Bola Tinubu’s budget presentation projected a reduction in inflation from 34.6% to 15% and an improvement in the exchange rate to N1,500/$, Fitch Ratings warned that an oversized budget deficit in 2025 could further depreciate the naira, heighten inflation, and raise borrowing costs.
Despite the challenges, the International Monetary Fund reported early signs of naira stabilization, linking this to interest rate hikes and the resolution of FX backlogs.
Meanwhile, Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria, expressed optimism about achieving the N1,500/$ projection, attributing it to ongoing CBN reforms.
