According to Blomberg’s most recent analysis, Nigeria’s naira has emerged as the world’s poorest performing currency over the last month.
The currency fell despite recent increases and a stellar performance last month, when it was named one of the best-performing currencies globally as of April 2024.
According to the report, the reversal of Naria’s gains has raised pressure on the Central Bank of Nigeria (CBN) to keep raising interest rates.
Naria’s fall to 1,466.31 against the dollar was reported to be the lowest level since March 20. According to a Bloomberg report posted on Friday, the latest development can be ascribed to a scarcity of USDollar on local markets, with only $84 million available on Thursday, half the previous day’s supply.
However, Tribune Online reported that the country’s currency fell to as low as N1,600/$1 on the official market and N1800/$1 on the parallel market in March.
Razia Khan, Standard Chartered’s Chief Economist for Africa and the Middle East, told Bloomberg that $1.3 billion of naira futures will mature at the end of the month, potentially lowering market mood and increasing demand for dollars. She explained,
“When the currency appreciated rapidly, offshore investors took profits, causing the dollar-naira exchange rate to rise again.
This is fully consistent with the functioning market.” Continuing, Bloomberg reported that the naira’s current performance is projected to increase pressure on the country’s central bank, leading to another rate hike following its upcoming policy meeting on May 21.
Meanwhile, the CBN was said to have raised interest rates by a total of 600 basis points in February and March, assisting the naira in recovering from a low of 1,627 naira on March 8 to 1,072 in mid-April.
In the unofficial market, the naira sank 0.9% to N1,468 per dollar on Friday.