The naira has been labeled the worst-performing currency globally in the first half of 2024. The Central Bank of Nigeria’s efforts to support the currency have been impeded by devaluation, insufficient dollar liquidity, and market volatility, according to a Bloomberg report released on Friday.
In addition to the naira, the currencies that performed the poorest in the first half of the year were the pound in Egypt and the cedi in Ghana. The naira declined for the ninth day in a row, according to Bloomberg’s data from FMDQ, closing at 1,510 per dollar on Thursday.
“The losing streak is the longest since July 2017, bringing the year-to-date decline to 40 percent,” said the report.
The pound, which is experiencing an economic crisis and dollarization, is the currency with the worst performance among all the world currencies that Bloomberg tracks, with the naira coming in second.
Samir Gadio, Head of Africa Strategy at Standard Chartered Bank Plc, commented on the currency’s status, saying, “While the naira is undervalued and has seen significant adjustment, the supply of dollars needs to improve to support the currency. The influx of portfolios has not increased despite the favorable local rates. The naira’s stability in the future depends on increased foreign exchange inflows and possible appreciation.”
According to PwC’s most recent economic analysis on Nigeria, the average value of the naira versus the US dollar dropped from N461.1 in May 2023 to N1,433.80 in May 2024, a decline of 67.8 percent. The devaluation continued in spite of the CBN’s foreign exchange market changes, which were intended to promote price discovery and draw in liquidity.
The naira briefly had the title of best-performing currency in the world in March, but it lost it the following month.
According to Bloomberg, there was an imbalance in the supply and demand of dollars, which caused volatility in the currency between mid-April and mid-May. But in June, when dollar inflows improved, this trend slowed.
CBN Governor Olayemi Cardoso voiced hope earlier this week, suggesting that the worst of the naira’s volatility might be behind us.
Bloomberg’s compilation of FMDQ data indicates that this month’s naira trading range was rather tight, ranging from 1,473/$ to 1,485/$. Its 100-day fluctuations are at their lowest point since November, and its 10-day rolling volatility is at its lowest point in a year thanks to this steadiness.
