Naira Named Among the Worst Performing Currencies Globally in 2023, Expected to Deteriorate Further in 2024

In a recent report by Bloomberg, the Naira has been identified as one of the world’s poorest performing currencies in 2023. Analysts predict that the Nigerian currency is on track for its most challenging year since the nation’s return to democracy in 1999, with further depreciation anticipated in 2024.

Bloomberg’s report highlights a staggering 55% plunge of the Naira this year to 1,043 per dollar as of Thursday, positioning it as the world’s worst performer among 151 tracked currencies, trailing only behind the Lebanese pound and the Argentine peso.

As reported by SK Blog, the Naira hit an all-time low on Thursday, depreciating to N1,043.09 per US dollar in the official market just days before the New Year. The report attributes this decline to the Central Bank of Nigeria’s decision to allow the currency to trade more freely in June, coupled with President Bola Tinubu’s elimination of costly petrol subsidies.

Furthermore, the report notes that Nigeria’s foreign reserves have reached a six-year low, primarily tied up in overdue short-term overseas obligations. Vetiva Capital Management Ltd forecasts, as quoted by Bloomberg, indicate that the Naira may continue to slide unless the government attracts international investors or increases oil output.

In a communication to clients, Vetiva Capital emphasizes the need for further devaluation, paired with a tighter monetary policy, to address imbalances in the foreign exchange market. The report suggests that a substantial boost in external reserves, a significant increase in foreign exchange inflows, and a reduction in money supply would positively impact the Naira’s stability.