The Nigerian Naira has been identified as one of the worst-performing currencies in sub-Sahara Africa for the year 2024. This assessment comes from the World Bank’s most recent edition of the Africa’s Pulse report, which highlights significant economic challenges facing the region.
According to the report, the Naira’s performance is comparable to that of the Ethiopian Birr and the South Sudanese Pound, both of which have also experienced notable declines. This situation underscores the broader economic difficulties affecting several currencies in the region.
The report points to a persistent increase in the demand for US dollars as a key factor contributing to the Naira’s depreciation. Coupled with this demand is a limited inflow of dollars, which has exacerbated the currency’s decline over recent months.
Read also: Naira Drops to 1,600/$ in The Parallel Market.
By August 2024, the Naira had lost approximately 43% of its value. This sharp decline places it among the worst-performing currencies in sub-Sahara Africa, alongside the Ethiopian Birr and South Sudanese Pound.
One of the main drivers of the Naira’s weakening is the surge in demand for US dollars within the parallel market. This demand is largely fueled by financial institutions, money managers, and non-financial end-users, all seeking to secure dollars amidst the currency’s volatility.
Additionally, the report notes that slow foreign exchange disbursements from the central bank have further complicated the situation. This delay in providing dollars to currency exchange bureaus has contributed to the ongoing depreciation of the Naira.
Recent data indicates that the Naira hit a new record low, closing at N1,700 per dollar in the parallel market on October 14, 2024. This marks a 0.29% drop from its previous rate of N1,695 per dollar recorded on October 11.
Interestingly, this decline occurred despite a surge in crude oil prices, which have surpassed $80 per barrel. The juxtaposition of rising oil prices and the Naira’s depreciation highlights the complexities of Nigeria’s economic landscape.
