The naira has dropped in value more than any other currency in the world in the first half of 2024.
Bloomberg reported on Friday, June 28, 2024, that the Central Bank of Nigeria’s (CBN) attempts to strengthen the naira have been unsuccessful due to devaluation, dollar scarcity, and market instability.
It further noted that the naira continued to decline, reaching a ninth consecutive day of weakening, and was trading at ₦1,510 per dollar by the end of Thursday, June 27, 2024.
“The losing streak is the longest since July 2017 and takes the decline since the start of the year to 40 per cent,” the report said. Adding that, “the naira’s performance is the worst among global currencies tracked by Bloomberg, beside that of the pound in Lebanon, which is undergoing an economic crisis and witnessing dollarisation,” the report stated.
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The report also revealed that the naira’s value has been unstable since May 2024 due to an imbalance in the demand and supply of US dollars.
In the same breath, the Egyptian pound, the Ghanaian cedi, along with the naira, were the three currencies that performed the worst in the first half of the year.
Also, according to the Head of Africa Strategy at Standard Chartered Bank Plc, Samir Gadio, although the naira has been devalued, an increase in dollar supply is necessary to stabilize the currency.
“While the naira is undervalued and has seen significant adjustment, the supply of dollars needs to improve for the currency to be supported,” Gadio said.
Samir added that the naira’s stability will depend on sustained foreign exchange inflows.
“What will matter going forward is whether it can stabilize on improving foreign exchange inflows and perhaps see some appreciation,” he said.
PricewaterhouseCoopers’ (PwC) recent report also indicated that the naira’s value decreased sharply against the dollar, from ₦461.1 to ₦1,433.80, over the past year, representing a 67.8% decline.
“The depreciation took effect despite foreign exchange market reforms by CBN to achieve price discovery and attract liquidity to the market,” PwC said.
The naira had a brief moment of strength in March 2024, becoming the top-performing currency globally, but that success was short-lived and it fell in value the following month.
Earlier this week, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, said that the naira’s unstable period may have come to an end.
This development has resulted in a 10-day rolling of the naira’s short-term volatility in the past year.
