Nigeria’s currency, the naira, is among the worst-performing currencies in Africa, so says the World Bank.
In June 2023, the Central Bank of Nigeria directed Deposit Money Banks to remove the rate cap on the naira at the official Investors and Exporters’ window of the foreign exchange market, and allow the free float of the naira against the dollar and other global currencies. Since then, the naira had fallen from N473.83/$ to around N800/$ officially.
The global bank noted that the currency weakened by nearly 40 per cent against the US dollar since a mid-June devaluation.
It explained this in its report titled, ‘Africa’s Pulse: An analysis of issues shaping Africa’s economic future (October 2023 | Volume 28).
“So far this year, the Nigerian naira and the Angolan kwanza are among the worst performing currencies in the region: these currencies have posted a year-to-date depreciation of nearly 40 per cent.
“The weakening of the naira was triggered by the central bank’s decision to remove trading restrictions on the official market. For the kwanza, it was the decision of the central bank to stop defending the currency as a result of low oil prices and greater debt payments.”
Other currencies with significant losses so far in 2023, according to the World Bank, included South Sudan (33 per cent), Burundi (27 per cent), the Democratic Republic of Congo (18 per cent), Kenya (16 per cent), Zambia (12 per cent), Ghana (12 per cent), and Rwanda (11 per cent). It noted that parallel exchange market rates are also compounding inflationary problems for some countries in the African region.