Naira depreciation: worst year since 1999 is predicted – Report

One of the currencies with the worst performance in the world in 2023 is the naira.

In its most recent report, Bloomberg states this.

According to the report, analysts predict that the currency will continue to depreciate in 2024, making it the worst year since democracy was restored in 1999.

The Lebanese pound and the Argentine peso are the two currencies that have performed the worst globally, with the Naira falling 55% this year to 1,043 per dollar as of Thursday, according to Bloomberg, which tracks 151 currencies.

Just a few days before the New Year, the Naira fell to an all-time low on Thursday, depreciating to N1,043.09 per US dollar on the official market, according to Daily Trust.

However, the report stated that the depreciation began following the Central Bank of Nigeria (CBN)

facilitated more open currency trading in June and President Bola Tinubu eliminated pricey fuel subsidies.

It also stated that Nigeria’s foreign reserves have dropped to their lowest point in six years, with the majority of them being weighed down by past-due short-term foreign debt.

According to a forecast by Vetiva Capital Management Ltd., which was cited by Bloomberg, the currency may depreciate even more unless the federal government under Tinubu leads attracts foreign investors or increases oil production.

“It’s clear that further devaluation — alongside tighter monetary policy — is needed to reduce imbalances in the FX market,” stated Vetiva Capital in a note to clients.

“The Naira will benefit from a considerable increase in external reserves, a material increase in foreign exchange inflows, and a reduction in the money supply.”