After a brief stint as the best-performing currency in April 2024, the Nigerian currency has now relinquished those gains, emerging as the worst-performing currency, as per the latest Bloomberg report.
According to the report, the Naira declined to N1,466.31 per U.S. dollar, the lowest it has been since March 20 2024.
Before its brief resurgence in April 2024, the currency had been experiencing a downward spiral, prompting Nigerian authorities to introduce a series of measures aimed at arresting its decline. Furthermore, the Nigerian government initiated a crackdown on global cryptocurrency exchanges, notablye Binance, alleging their involvement in facilitating currency manipulation.
🇳🇬REGULATION | #Binance Yet to be Served with Charges in Nigerian Case, Case Postponed to May 17 2024
Binance and its executives, including Tigran Gambaryan, a U.S. citizen serving as Head of Financial Crime Compliance, and Nadeem Anjarwalla, a British-Kenyan Regional Manager… pic.twitter.com/YrvBuS8fuU
— BitKE (@BitcoinKE) April 22, 2024
Razia Khan, Chief Economist for Africa and the Middle East at Standard Chartered, told Bloomberg that $1.3 billion in Naira futures will mature at the end of this month [May 2024], weighing on market sentiment.
“The belief is that this will create more demand for dollars,” she said.
The recent decline is the latest instance of volatility since Nigerian President, Bola Tinubu, eased foreign-exchange controls in June 2023. Since then, the currency has depreciated by approximately 68% against the dollar. Khan emphasized that the latest fluctuation indicates that market forces are now being permitted to operate.
“When the currency appreciated very fast, there had been a bout of profit taking by offshore investors, and this meant that Dollar-Naira exchange rate backed up again,” said Khan.
Two other African countries rank among the four worst-performing currencies in April 2024:
- On May 10 2024, the Zambian Kwacha reached a historic low of 27.3969 per dollar.
- Meanwhile, Ghana’s Cedi depreciated to 13.99 Naira against the dollar on the same day, marking its weakest level since 2022.
It’s noteworthy that both Zambia and Ghana are currently undergoing debt restructuring processes.
“For Ghana and Zambia, the delays with reaching a debt restructuring agreement with private creditors is likely weighing on capital flows,” said another analyst.
“Both countries are unlikely to attract fresh capital inflows until the ongoing debt restructuring negotiations are concluded.”
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