The naira has emerged as the world’s worst-performing currency in the first half of 2024.
According to a Bloomberg report published on Friday, devaluation, insufficient dollar liquidity, and market volatility have hampered the Central Bank of Nigeria’s efforts to strengthen the currency.
Aside from the naira, Egypt’s pound and Ghana’s cedi were the world’s other worst-performing currencies in the first half of the year.
It reported that the naira fell for the ninth consecutive day to 1,510 per dollar by Thursday’s closing, citing FMDQ data.
“The losing streak is the longest since July 2017 and takes the decline since the start of the year to 40 per cent.
“The naira’s performance is the worst among global currencies tracked by Bloomberg beside that of the pound in Lebanon, which is undergoing an economic crisis and witnessing dollarisation,” the report noted.
Commenting, the Head of Africa Strategy at Standard Chartered Bank Plc, Samir Gadio, stated in an email that the naira is undervalued and has witnessed substantial adjustment. The supply of dollars must improve for the currency to be supported.
“Portfolio inflows have yet to pick up, even amid still-attractive local rates.
“What will matter going forward is whether it can stabilise on improving foreign exchange inflows and perhaps see some appreciation.”
Meanwhile, PwC, in its latest economic report on Nigeria, stated that the naira fell 67.8 per cent against the dollar, from an average of N461.1 in May 2023 to N1,433.80 in May 2024.
“The depreciation took effect despite foreign exchange market reforms by CBN to achieve price discovery and attract liquidity to the market,” PwC said.
In March, the naira emerged as the best-performing currency in the world, a distinction that was reversed the following month.
Bloomberg said that the currency was volatile between mid-April and May due to a demand-supply imbalance for the greenback, but the trend calmed in June as dollar inflows improved.
Meanwhile, earlier last week, CBN Governor, Olayemi Cardoso suggested that the worst of the naira’s volatility may have passed.
This month, the naira has moved in a narrow range of 1,473/$ to 1485/$, according to FMDQ data compiled by Bloomberg.
