By Tanko Lami
LAGOS, Nigeria (VOICE OF NAIJA)–In the first half of 2024, the Nigerian naira has been identified as the world’s worst-performing currency due to factors such as devaluation, limited dollar liquidity, and market instability, as reported by Bloomberg on Friday.
Among global currencies, Egypt’s pound and Ghana’s cedi joined the naira as the weakest performers in the first half of the year.
According to Bloomberg’s analysis of FMDQ data, the naira continued its decline, dropping for the ninth consecutive day to reach 1,510 per dollar by the close on Thursday.
“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.
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Providing an update on the currency, the Head of Africa Strategy at Standard Chartered Bank Plc, Samir Gadio, in a mail said, “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.”
According to PwC’s most recent economic report on Nigeria reveals that the naira experienced a significant depreciation of 67.8% against the dollar, falling from an average of N461.1 in May 2023 to N1,433.80 by 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.
Back in March, the naira achieved the distinction of being the world’s top-performing currency, although this achievement was short-lived as conditions changed the following month.
Bloomberg noted heightened volatility for the currency from mid-April to May, driven by imbalances in demand and supply for the dollar, though the situation eased in June with improved dollar inflows.
Meanwhile, earlier this week, CBN Governor Olayemi Cardoso expressed optimism that the worst of the naira’s volatility could be behind us.
Data from FMDQ, compiled by Bloomberg, shows the naira trading within a tight range of 1,473 to 1,485 per dollar this month.
As a result, its 10-day rolling volatility has dropped to its lowest point in a year, while its 100-day swings are at their lowest since November.