Naira Ranks Among World’s 10 Worst-Performing Currencies Amid Economic Struggles

Nigeria’s currency, the naira, has been listed among the ten worst-performing currencies globally, according to a report by Bloomberg. The report highlights that five of the worst-performing currencies are from Africa, including the Zambian kwacha, Angolan kwanza, and Nigeria’s naira.

The significant decline in the value of these currencies has been attributed to a combination of economic challenges such as unstable commodity prices, inflationary pressures, and a scarcity of dollar liquidity. Bloomberg noted that many African economies, heavily reliant on oil exports, are particularly vulnerable to fluctuations in oil prices.

Keonethebe Bosigo, portfolio manager at Mazi Asset Management, explained that while falling oil prices play a significant role, the real issue lies in poor currency management and economic imbalances. “Oil prices are a factor,” Bosigo stated, “but the naira’s overvaluation and the delay in allowing it to adjust has led to a loss of confidence in the currency.”

Oxford Economics economist, Irmgard Erasmus, also commented on the ongoing pressure facing the naira, despite reforms aimed at liberalising Nigeria’s current account. Erasmus explained that while Nigeria has taken steps to liberalise its currency exchange framework since President Tinubu’s administration took office in 2023, persistent dollar shortages and restrictive banking regulations continue to weigh heavily on the naira’s performance.

Erasmus also pointed out that the naira remains undervalued, estimating that it should be trading around N1,100 per dollar, compared to the current rate of N1,544/$. He stressed that without major policy reforms and improved dollar liquidity, the outlook for the naira remains weak.

In June 2023, Nigeria’s Central Bank took significant steps to unify the country’s multiple foreign exchange (FX) rate systems, consolidating them into the Investors and Exporters (I&E) window. This move, however, led to a sharp depreciation of the naira and increased volatility in the FX market.

As of the close of trading on Friday, data from FMDQ Securities showed the naira trading at N1,541 per dollar, reflecting the ongoing challenges the currency faces in the global market.

With the government’s slow pace of reforms and ongoing currency management issues, the naira’s position among the worst-performing currencies globally seems unlikely to change in the short term. Experts agree that stronger policy measures and improved access to dollars are essential for stabilising Nigeria’s economy and restoring confidence in the naira.