Key Updates on Nigeria’s Exchange Rate

• Nigeria’s exchange rate closed June 2024 at N1,503.3/$1, marking a 1.3% depreciation for the month.
• Despite breaching the N1,500/$1 mark, the exchange rate showed relative stability within a 2% band, fluctuating between N1,470 and N1,503.
• This trend highlights the first month of stable exchange rates since the Central Bank of Nigeria implemented significant foreign exchange reforms, though Nigerians continue to experience prolonged exchange rate volatility with a 40% depreciation since December 2023.

Nigeria’s Exchange Rate in June 2024: A Month of Relative Stability Amidst Prolonged Volatility
Key Highlights:

1. Closing Rate: Nigeria’s exchange rate closed June 2024 at N1,503.3/$1, a 1.3% depreciation for the month.
2. Stability: Despite breaching the N1,500/$1 mark, the exchange rate showed relative stability within a 2% band, fluctuating between N1,470 and N1,503.
3. Reforms Impact: This marks the first month of relative stability since the Central Bank of Nigeria (CBN) implemented significant foreign exchange reforms. However, the naira has depreciated by 40% since December 2023.
   Exchange Rate Trends (H1 2024):
   • January: High volatility, with rates spiking over N1,000/$1 and closing at N1,348.62/$1.
   • February: Continued rise, peaking at N1,665.50/$1.
   • March: Gradual decline, closing at N1,309.39/$1.
   • April: Initial stability, closing at N1,419.11/$1.
   • May: Ongoing fluctuations, ending at N1,485.99/$1.
   • June: Relative stability, closing at N1,505.30/$1.
     CBN Policies in H1 2024:
   • Unified forex exchange market.
   • Series of reforms to enhance forex supply and reduce demand restrictions.
   • Revised operations for International Money Transfer Operators (IMTOs) and stringent measures on Bureau De Change (BDC) transactions.
   • Addressed excessive foreign currency speculation and mandated banks to sell excess dollar stock.
   • Targeted international oil and gas companies to manage forex inflows.
     Current Market Situation:
   • Liquidity Issues: Despite reforms, dollar illiquidity continues to pressure the naira, with reduced FX turnover in June 2024.
   • Monetary Policy Rate (MPR): Raised by 750 basis points from January to May 2024 to tackle inflation and attract foreign investors.
   • Foreign Reserves: Increased to $34.07 billion by June 26, 2024, attributed to reduced CBN intervention and improved export earnings.
     Conclusion:
     While June 2024 showed signs of relative stability in Nigeria’s exchange rate, prolonged volatility and significant depreciation since December 2023 highlight ongoing economic challenges and the mixed impact of CBN’s policy measures.