Nigeria’s naira has experienced a sharp nosedive in its recent gains, emerging as the world’s worst-performing currency over the last month, according to a new Bloomberg report.
The Friday report averred that this development places increased pressure on the Central Bank of Nigeria to continue raising interest rates.
The naira has depreciated to 1,466.31 against the dollar, marking its weakest level since March 20.
This decline is attributed to the local scarcity of the US currency, with only $84 million available on Thursday, half of the previous day’s supply.
The report further highlights that the drop in the naira’s performance is expected to intensify pressure on the CBN to implement another rate hike after its upcoming policy meeting on May 21.
In February and March, the Central Bank increased rates by a total of 600 basis points.
This move helped the naira in rebounding from its low of 1,627 naira on March 8 to 1,072 in mid-April, as investors sought out higher-yielding local assets.
Naira weakness was also seen on the unofficial market, where it slumped 0.9% to 1,468 naira a dollar on Friday owing to increased demand from individuals and small businesses, according to chief executive of Forward Marketing Bureau de Change Ltd. Abubakar Muhammed, which tracks the data in the commercial capital, Lagos.
The weakness of the naira was also evident in the unofficial market, where it depreciated by 0.9% to 1,468 naira against the dollar on Friday.
According to the report, the chief executive of Forward Marketing Bureau de Change Ltd., Abubakar Muhammed, which monitors data in Lagos, traced this decline to heightened demand from individuals and small businesses.
