Fatshimetrie recently released a report revealing alarming information about the performance of the Naira in 2024. According to the report, factors such as devaluation, lack of dollar liquidity and market volatility are hampering the efforts of the Central Bank of Nigeria (CBN) to strengthen the national currency.
Analyzing data from FMDQ, Fatshimetrie identified a trend of continued depreciation of the Naira, which reached ₦1.510 per dollar at the close of trading on Thursday, June 27, 2024. This long depreciation streak, the longest since July 2017, has resulted in a 40% drop since the beginning of the year. This ranks the Naira among the weakest currencies in the world, alongside the economically depressed Lebanese pound.
Yet, barely two months ago, the Naira was named the best performing currency in the world. Goldman Sachs, in its March Economic Outlook for Nigeria, had pegged the Naira as the best-performing currency in April 2024, even predicting that it could trade below ₦1,000 per dollar in the coming months.
Unfortunately, the Naira’s downward slide has continued. According to the latest PricewaterhouseCoopers Limited (PwC) Economic Outlook for Nigeria, the currency has fallen by 67.8% against the dollar, from an average of ₦461.10 in May 2023 to ₦1,433.80 in May 2024. This depreciation has occurred despite the foreign exchange market reforms put in place by the CBN to promote price discovery and attract liquidity into the market.
In the face of this worrying situation, it is crucial for Nigeria’s financial authorities to take adequate measures to stabilize the Naira and restore investor confidence. The volatility of the foreign exchange market and the lack of dollar liquidity can only further weaken the national currency and jeopardize the country’s economic health.
In conclusion, it is essential to address these challenges with rigor and determination in order to redress the situation of the Naira and strengthen Nigeria’s financial stability.