Naira Among Worst-Performing Currencies in the World, Report Predicts Direction in 2024
- The naira was ranked as one of the worst performing in the world, following a massive decline witnessed during the week
- Lebanese pound and the Argentine peso were also among the list, according to Bloomberg's analysis
- The report also cited that the depreciation was triggered by President Bola Tinubu elimination fuel subsidies
The naira has been ranked among the worst-performing currency in the world in 2023.
According to Bloomberg, naira sit in the bottom three of 151 currencies tracked after depreciating by 55% to N1,043 per dollar as of Thursday, 28th December 2023.
Similarly, the exchange rate in the streets was N1,208 to the dollar.
Source: UGC
The news agency reported that the Lebanese pound and the Argentine peso are the next worst-performing currencies after the naira.
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It added that the 12-month contract for the naira is trading close to a record low of 1,294.44 to the dollar in the non-deliverable futures market.
This comes on the back of a report that the largest crude producer in Africa has the lowest foreign reserves in six years; most of its reserves are burdened by past-due short-term foreign debt.
The report added that after President Bola Tinubu eliminated fuel subsidies and the central bank opened up the currency's trading in June, the massive depreciation started.
As a result, the country has witnessed a rise in inflation, which is at 28.2% while the benchmark interest rate is at 18.75%, along with the naira's decline.
Future of the naira
An investment banking company, Vetiva Capital Management Ltd predicted that the naira may depreciate more until the present administration draws in foreign capital or increases oil production earlier put off by the negative real interest rate.
Patrick Curran, a senior economist at Tellimer Ltd told the news agency that further devaluation and tighter monetary policy could help to reduce imbalances in the FX market.
Charles Abuede, a financial analyst explained that speculative activities, unabating demand pressure and the expectations for further devaluation of the local currency have seen the naira skid against the dollar in recent months amid the recent FX rates harmonisation by the CBN with the introduction of the willing buyer, willing seller model.
he added,
"It was expected ab initio that the naira would strengthen against the greenback following the announcement by the CBN that it was about clearing all FX forwards contract backlogs; outcome was further devaluation and this has brought about the lack of confidence in the currency which also means that our import is now costly while export is cheap."
FG hopeful the naira will rise
Meanwhile, Ben Akabueze, the director-general of the federation's budget office, said that the Naira will strengthen in value in the foreign exchange market in 2024.
He noted that the Tinubu-led government expects the reforms initiated in 2023 to start yielding results in 2024, which is why it maintains a positive stance on the exchange rate.
Naira Reverses Direction to Gain Massive N135/dollar From Historic Low, Set Record in 2023
Legit.ng reported that on Friday, December 29, 2023, the Naira reversed from its history low to set a closing record for the year 2023 at the official foreign exchange market known as Nigerian Autonomous.'
The naira closed at N907 per dollar to gain 13.03% or N135.89 per dollar. This represents a massive gain from the N1,043 per dollar it closed the previous day.
According to data presented by FMDQ Securities, the currency’s intra-day high hit N1,224 per dollar, while the intra-day low was N700 per dollar.
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Source: Legit.ng
