Naira now world’s worst performing currency, says Bloomberg
Maureen Aguta
Nigeria’s Naira has experienced a reversal 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 emphasised 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.
So This Happened (247) reviews Wofai Fada’s engagement, a fake medical doctor, others0.00 / 0.00
CBN governor, Yemi Cardoso, had previously hailed the naira as the best-performing currency globally as of April 2024.
The naira faced challenges in March, plummeting to as low as N1,600/$1 on the official market and N1800/$1 on the parallel market.
Cardoso attributed this achievement to a series of foreign exchange market reforms and positive sentiment from leading international investment institutions.
Speaking with Bloomberg, the Chief Economist for Africa and the Middle East at Standard Chartered, Razia Khan, estimates that $1.3 billion in naira futures will mature at the end of this month, potentially dampening market sentiment.
“The belief is that this will create more demand for dollars.
“When the currency appreciated very fast, there had been a bout of profit-taking by offshore investors, and this meant that the dollar-naira exchange rate backed up again.
“This is completely in line with the functioning market,” she said
The report further highlights that the decline 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 aided 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 slipped 0.9% to 1,468 naira a dollar on Friday owing to increased demand from individuals and small businesses, said Abubakar Muhammed, chief executive of Forward Marketing Bureau de Change Ltd., which tracks the data in the commercial capital, Lagos.