Market News
Naira ends 2024 at N1,541.75/$1, external reserves grow by 24% - THE SUN
By Chinwendu Obienyi
The naira ended 2024 trading at N1,541.75/$1 in the official market, reflecting a significant depreciation of about 70% throughout the year.
However, external reserves grew by 24%, bolstered by increased crude oil production, improved foreign exchange inflows, and the implementation of the Electronic Foreign Exchange Matching System (EFEMS), which contributed to a more transparent FX market.
Despite these gains in reserves, the parallel market showed volatility, with rates as high as N1,775 during the year.
Specifically, the naira which was quoted at N997/$1 at December 31, 2023 in what was then known as the Nigerian Autonomous Foreign Exchange Market (NAFEM), closed the year at N1,541.75/$1 at the Nigerian Foreign Exchange Market (NFEM), representing 70% decline in one year.
However, in his new year message to Nigerians, President Bola Tinubu expressed optimism about Nigeria’s economic trajectory.
He highlighted several encouraging developments, including a gradual decrease in fuel prices, three consecutive quarters of foreign trade surpluses, an increase in foreign reserves, and the strengthening of the naira against the U.S dollar.
According to the Central Bank of Nigeria (CBN), external reserves rose to $40.88 billion as of December 30, 2024, compared to $32.91 billion at the end of 2023, marking a 24.2% increase. This growth was driven by enhanced crude oil production, improved foreign exchange inflows, and contributions from diaspora remittances. The increased reserves provided the CBN with greater capacity to stabilize the official market. However, lingering challenges in supply-demand dynamics and speculative pressures in the parallel market contributed to the naira’s sustained depreciation.
It will be recalled that Tinubu whilst presenting the 2025 budget to the Senate yesterday, explained that the budget is intended to foster inclusion, growth and promote equitable distribution of income.
He stated that Nigerians would soon experience positive developments while adding that the country’s indices show growth recorded during his administration so far.
He revealed that the country’s foreign reserves have hit nearly $42 billion this month from negative numbers seen before he assumed office in May 2023, providing a robust buffer against external shocks.
Experts have projected a more stable naira due to anticipated increases in foreign investments, remittances, and further reforms aimed at closing the exchange rate gap.
