Nigeria’s naira has experienced a dramatic reversal of fortune, plummeting to the rank of worst-performing currency globally in the first half of 2024, according to a Bloomberg report on Friday.Read more
This depreciation comes after a brief period of strengthening earlier this year, highlighting the challenges facing the Nigerian economy.
Apart from the naira, the Egyptian pound and the Ghanaian cedi were the world’s worst performing currencies in the first six months of this year.
Tracking data from FMDQ, the report said that the naira weakened for the ninth consecutive day to 1,510 per dollar at Thursday’s close.
“This loss streak is the longest since July 2017 and brings the decline since the beginning of the year to 40 percent.
“The naira’s performance was the worst among global currencies tracked by Bloomberg apart from the pound’s performance in Lebanon, which is experiencing an economic crisis and witnessing dollarization,” the report noted.
In March, the naira emerged as the world’s best-performing currency, a feat that was reversed the following month.
READ ALSO:Naira exchange rate plunges by N3, trading at N1,510/$1 in official market
The report added that the currency fluctuated between mid-April and May due to an imbalance between demand and supply of the greenback before the trend slowed in June due to increased dollar inflows.
Several factors are believed to have contributed to the Naira’s decline:
• Devaluation: The Central Bank of Nigeria (CBN) has devalued the Naira in an attempt to address a persistent trade deficit. However, this has made imports more expensive and contributed to inflationary pressures.
• Dollar Shortage: The lack of available US dollars is hampering businesses and individuals who need to conduct international transactions. The shortage is caused by a combination of factors, including lower oil revenues and capital flight.
• Market Volatility: Uncertainty surrounding the Nigerian economy and its future growth prospects has led to market volatility, further weakening confidence in the Naira.
The impact of this depreciation is being felt across Nigeria, with businesses struggling to cope with rising import costs, while consumers face higher prices for daily necessities. Additionally, the weakening Naira discourages foreign investment, thereby hampering economic growth.
The CBN has implemented several measures to address the situation, including raising interest rates and seeking to increase foreign exchange inflows. However, the effectiveness of these measures remains to be seen.
Nigerian Naira plunges, joins cedi and pound as worst performing currencies in H1 2024 first appeared on Latest Nigeria News | Top Stories from Ripples Nigeria.
