Nigeria’s naira has been ranked among the world’s 10 worst-performing currencies, according to a report by Bloomberg.
This decline, shared with other African currencies like the Zambian kwacha and Angolan kwanza, is largely due to economic challenges, unstable commodity prices, inflation, and a lack of dollar liquidity.
While oil prices have been cited as a major factor, experts like Keonethebe Bosigo, a portfolio manager at Mazi Asset Management, point to poor currency management and economic imbalances as the primary causes. Bosigo noted that Nigeria’s failure to allow the naira to adjust led to its overvaluation and subsequent loss of confidence.
Irmgard Erasmus, an economist at Oxford Economics, also highlighted persistent pressure on the naira despite reforms aimed at liberalizing Nigeria’s current account. Issues with liquidity and dollar supply remain, exacerbated by falling Brent crude prices.
Erasmus added that, under normal conditions, the naira should be trading closer to ₦1,100 per dollar, compared to its current ₦1,544/$.
In June 2023, the Central Bank of Nigeria unified the multiple foreign exchange (FX) rates into one, but the move led to further depreciation and volatility in the FX market.
Without significant reforms and improved dollar liquidity, the outlook for the naira remains unstable.
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