Naira set for worst year since 1999 with no rebound in sight – Bloomberg report

Nigeria’s currency, Naira, has been rated among the world’s worst performing currencies in 2023.

According to Bloomberg report, the currency is poised for its worst year since the return to democracy in 1999, with analysts predicting further depreciation in 2024.

Bloomberg noted that Naira plunged 55 per cent this year to 1,043 per dollar as of Thursday, making it the world’s worst performer after the Lebanese pound and the Argentine peso among 151 currencies tracked.

Recall that Naira reached an all-time low on Thursday as it depreciated to N1,043.09 per US dollar in the official market just a few days to the New Year.

However, Bloomberg said the depreciation started after the Central Bank of Nigeria allowed the currency to trade more freely in June, and President Bola Tinubu scrapped costly petrol subsidies.

Bloomberg further added that Nigeria’s foreign reserves are at the lowest in six years with most of them encumbered by overdue short-term overseas obligations.

It quoted a forecast by Vetiva Capital Management Ltd suggesting that Naira may slip further unless Tinubu’s administration lures international investors or ramps up oil output.

“It’s clear that further devaluation — alongside tighter monetary policy — is needed to reduce imbalances in the FX market.

“A significant rise in external reserves, material increase in foreign exchange inflows, and reduction in money supply,” will be positive for the Naira, Vetiva Capital said in a note to clients.