Meet Africa’s Worst Currency, Which Exchanges $100 for a Million as Naira Hits Lowest Ever
- The Zimbabwean dollar has emerged as the world’s worst-performing currency
- The local currency crashed above 10,000 to a dollar on Tuesday, January 30, 2023
- Also, the Nigerian currency plummeted to its lowest on the same day, trading at N1,460 per dollar in the official market
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Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy.
The Zimbabwean dollar has emerged as Africa’s and the world’s weakest currency against the US dollar.
The currency weakened on Tuesday, January 30, 2023, trading above 10,000 against the US dollar in the spot market.
Source: Getty Images
A $100 bill makes holders instant millionaires
The decline is the first time since the currency was reintroduced in 2019.
A Bloomberg report said a $100 bill instantly transforms holders into millionaires due to the appalling performance of the currency.
The depreciation means anyone in Zimbabwe with $100 automatically becomes a millionaire in local currency.
The Zimbabwean currency remained below that 9.973 level, per information on the country’s central bank website.
Other reports said the local unit lost almost 40% of its value against the dollar in the official market since this year, making it the world’s worst-performing currency.
The parallel market rate also exceeded the milestone to trade between Z$12,000 and Z$14,000, a report by ZimPriceCheck said.
Local currency declined four years after reintroduction
The report said:
“The depreciation means that to buy a loaf of bread in the local currency, you need to count out 100 bills of the highest denomination."
“That’s invoking painful memories of the past in a country where more than a third of people live below the poverty line.
“In 2008, when hyperinflation prompted the central bank to issue a 100 trillion dollar note, pensions were wiped out overnight, and many resorted to barter.”
After one year, the local currency declined against the US dollar, and ten years later, it was reintroduced.
The currency has remained unstable despite measures by the government to stabilize it, such as requiring corporations to pay all taxes in the local currency and increasing interest rates to the highest levels in the world.
In 2023, the dollar surpassed the Zimbabwean currency as the most-used currency in any Southern African country amid high inflation.
Naira crashes to lowest in the official market
The development comes as the naira plunged to its lowest in the official foreign exchange market on Tuesday, January 31, 2024, closing higher than the unofficial parallel market, Legit.ng reported.
The development means that the parallel market stopped declining and sustained the rate it exchanged the day before at the same rate of N1,460 per dollar.
In the official Nigeria Autonomous Foreign Exchange Market (NAFEM), the naira closed at N1,482.57 compared to N1,348.62, showing a loss of N133.95 or 9.94% decline.
According to data from the FMDQ, daily forex turnover stood at $72.33 million compared to the $64.29 million recorded on Monday, January 29, 2024, a 12.50% rise.
The naira traded at a high of N1,531 per dollar and a low of N789 per dollar.
Naira expected to recover as CBN releases $500 million
Legit.ng reported the Central Bank of Nigeria (CBN) has disbursed another tranche of $500 million across sectors to follow up on its recent payment of about $2 billion to clear outstanding commitments in manufacturing, aviation, and petroleum sectors.
According to CBN’s acting director of Corporate Communications, Hakama Ali, the move aligns with the apex bank’s commitment to addressing the backlog of authenticated foreign exchange transactions.
Ali assured that CBN’s management is dedicated to settling the transactions swiftly.
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Source: Legit.ng
