The naira has been named the worst-performing currency in the world for the first half of 2024, according to a Bloomberg report released on Friday.
Factors such as devaluation, insufficient dollar liquidity, and market volatility have undermined efforts by the Central Bank of Nigeria (CBN) to strengthen the naira.
The naira, along with Egypt’s pound and Ghana’s cedi, ranked as the world’s worst-performing currencies in the first six months of the year. Bloomberg, tracking data from FMDQ, reported that the naira weakened for the ninth consecutive day, closing at 1,510 per dollar on Thursday. This marked the longest losing streak since July 2017, with the naira declining by 40 percent since the beginning of the year.
“The naira’s performance is the worst among global currencies tracked by Bloomberg, aside from the Lebanese pound, which is undergoing an economic crisis and experiencing dollarisation,” Bloomberg noted.
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Samir Gadio, Head of Africa Strategy at Standard Chartered Bank Plc, commented on the currency’s struggles in an email: “While the naira is undervalued and has seen significant adjustment, the supply of dollars needs to 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.”
A recent economic report from PwC revealed that the naira depreciated against the dollar by 67.8 percent, falling 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.
Earlier this year, the naira was briefly the best-performing currency in the world in March, but this achievement was reversed in April. Bloomberg also noted that the naira experienced volatility between mid-April and May due to the imbalance between dollar demand and supply, but the trend moderated in June with improved dollar inflows.
CBN Governor Olayemi Cardoso recently stated that the worst of the naira’s volatility might be over. Data from FMDQ, compiled by Bloomberg, showed that the naira traded in a narrow range between 1,473/$ and 1,485/$ this month, reducing its 10-day rolling volatility to the lowest in a year and its 100-day swings to the least since November.