Nigeria’s local currency, the naira, has been listed among the 10 worst-performing currencies worldwide, according to Bloomberg.
A recent report by the publication reveals that five African currencies, including the Zambian kwacha, Angolan kwanza, and naira, are among the worst performers. Economic challenges, unstable commodity prices, inflationary pressures, and lack of dollar liquidity contributed to this decline.
Bloomberg attributed the poor performance to many African economies relying heavily on oil exports, making them vulnerable to price declines.
Commenting on the data, Keonethebe Bosigo, portfolio manager at Mazi Asset Management, stated that oil prices are not the sole issue, citing poor currency management and imbalances as “the real culprits.”
Regarding the naira’s performance, Bosigo noted that oil prices are a factor but emphasized that the currency’s overvaluation and loss of confidence resulted from its inability to adjust.
Irmgard Erasmus, an economist at Oxford Economics, said the naira faces significant pressure despite reforms aimed at liberalizing the current account.
“The naira remains undervalued due to ongoing liquidity and dollar supply issues,” Erasmus added.
Erasmus attributed the naira’s decline to declining Brent crude prices and warned that without significant policy changes and improved dollar liquidity, the outlook remains fragile.
Following the Central Bank of Nigeria’s (CBN) unification of FX rate systems on June 14, 2023, the naira depreciated, causing FX market volatility.
As of Friday’s close, data from FMDQ Securities showed the naira trading at N1,541 per dollar.
