Naira Among World’s Worst Performers in 2023, Analysts Sound Alarm

The Naira has been identified as one of the worst-performing currencies globally in 2023, as reported by Bloomberg in its recent publication. The currency is projected to record its most challenging year since Nigeria’s return to democracy in 1999, with analysts anticipating further depreciation in 2024.

According to Bloomberg’s findings, the Naira experienced a significant decline of 55% against the US dollar in 2023, reaching 1,043 per dollar by Thursday. This places it as the third-worst performing currency out of 151 tracked, following the Lebanese pound and the Argentine peso.

Recent reports from Daily Trust indicate that the Naira hit an all-time low on Thursday, trading at N1,043.09 per US dollar in the official market, just days before the New Year.

The currency’s depreciation began after the Central Bank of Nigeria (CBN) allowed for more flexible trading in June, coupled with President Bola Tinubu’s decision to eliminate costly petrol subsidies. Additionally, Nigeria’s foreign reserves have dwindled to their lowest levels in six years, largely due to outstanding short-term overseas obligations.

Vetiva Capital Management Ltd has forecasted that without significant intervention, the Naira may continue to decline. They suggest that the Tinubu-led government must attract international investors or increase oil production to mitigate this trend. The note to clients from Vetiva Capital also emphasizes the need for further devaluation and tighter monetary policy to address existing imbalances in the foreign exchange market.

In conclusion, the Naira’s performance in 2023 has raised concerns about its stability and prompted calls for strategic measures to address the challenges facing the currency.

Source: Daily Trust