Bloomberg, a US-based media firm, has predicted that the Nigerian currency, naira, would continue to experience a decline in 2024, its worst performance since 1999.
The company’s market analysis shows that the local currency has seen a 55% decline in 2023, trading at N1,043 per dollar as of Thursday, December 28, 2023.
The performance makes the Nigerian currency the world’s worst performer among 151 currencies analyzed by the company.
The naira trails behind the Lebanese pound and the Argentine peso in performance for the outgoing year.
An earlier report by Legit.ng reveals that the naira plunged to a new low against the US dollar on Thursday, December 28, 2023, at the official market, trading at N1,043.09 per dollar.
The recent plunge of the naira represents a 16.35% decline compared to its previous closing rate.
The decline in Foreign Reserves, a buffer against depreciation, compounds Naira’s woes.
Nigeria’s reserves have hit a six-year low caused by pending short-term forex obligations.
Nigeria’s foreign reserves decline
According to the annual financial statement of the Central Bank of Nigeria (CBN) published in August 2023, the bank referred to two securities lending pacts with JP Morgan Chase for $7 billion in 2021 and two of $500 million with Goldman Sachs Group.
JP Morgan estimated Nigeria’s net Forex Reserve to be around $3.7 billion, lower than the net figure of $14 billion reported at the end of 2021.
It said its estimate is based on the partial information from CBN’s financial accounts, which it estimates to be around $3.7 billion at the end of 2022 from $14 billion at the end of 2021.
On June 14, 2023, the CBN announced the collapse of all Forex windows into the Investors and Exporters (I&E) window, ending the chaotic multiple exchanges, which experts said was responsible for the naira’s woes.
Since then, the naira plummeted from slightly above N400 per dollar to over N1,000 as of December 2023.
The naira is among the worst-performing currencies in Africa
Bloomberg’s report is not the first time the naira has been ranked poorly.
In October 2023, the World Bank ranked the naira among the worst-performing African currencies.
The organization also provided insights into Nigeria’s economic challenges.
The global bank disclosed this in its report titled, ‘Africa’s Pulse: An analysis of issues shaping Africa’s economic future (October 2023 | Volume 28), obtained by Legit.ng.
The World Bank noted that naira has weakened by nearly 40% against the US dollar since a mid-June devaluation, Punch reports.
But financial analyst and banker, Solomon Ike, disagrees with the Bloomberg report, saying that a series of measures are being put in place by the Nigerian government to strengthen the local currency.
He said that Nigeria is about to take delivery of important support from the Afrexim Bank that will aid the naira in recovery.
He said: “What we are seeing can be described as the final onslaught against the local currency. Remember the CBN has made a tranche payment on its FX backlogs perceived to be behind the naira’s troubling performance. So, we expect a massive rallying of the naira in the first quarter of next year.”