Editor
With the consistent decline of the Naira, Nigeria’s legal tender, the country has been rated among the top 11 worst-performing currencies in the world. The criteria applied before arriving at this conclusion were the performances of the currencies of countries in the world against the US Dollar over some time.
Over the past few months, Nigeria’s naira has experienced a free fall causing a serious multiplier effect on the country’s economy. As of today, Tuesday, February 20, 2024, the naira is N1769/$.
But this has been blamed on the Floating policy of the Central Bank of Nigeria (CBN), the nation’s apex bank and the highest decision-making organ regarding monetary and fiscal policies of the country.
In a recent report credited to the Johns Hopkins University, in Baltimore, United States of America, the Naira, Nigeria’s currency is ranked 11th worst-performing currency against the US dollar.
Africa Health Report checks revealed that in a recent currency watchlist, a professor of Applied Economics at Johns Hopkins University, Steve H. Hanke measured the depreciation of some currencies around the world from January 1, 2020, to September 2, 2022.
According to Hanke, the currencies under review were “tanking” due to poor economic policies.
Back at home, Africa Health Report last Thursday reported that on the parallel segment of the foreign exchange market, the Naira depreciated to N1,600/$.
Earlier reports according to our checks showed that the naira fell to N1,350 per dollar in the parallel market from N1,295 per dollar.
Further investigations showed that the naira depreciated to N931.23 per dollar in the Nigerian Foreign Exchange Market (NAFEM).
Data from FMDQ showed that the indicative exchange rate for NAFEM rose to N931.23 per dollar from N878.57 per dollar on Tuesday, indicating N52.66 depreciation for the naira.
This has resulted in a widening gap between the official and parallel market exchange rates but at N418.77 per dollar yesterday from N416.43 last week, despite policies and measures put in place by the CBN to arrest the situation. These included efforts to curb speculations on the Black Market.
Further findings show that the naira has weakened beyond financial experts’ projections in recent times.
The Hanke’s Report noted, “As of September 2, 2022, Naira had experienced -48.87% depreciation against the USD at NGN710/USD, (using the black-market rate) though the apex bank chief said the parallel market exchange rate is illegal, the official rate is not accessible either”.
“At the time of compiling this list, $1 is exchanged at NGN716 at the black-market rate that is most accessible to Nigerians who need FX to meet their needs”, said the Report.
Also concerning is there are more than 20 currencies in Africa that are more valuable than the Naira though the country prides itself as the giant of Africa.
Meanwhile, Nigeria is the largest economy by Gross Domestic Product (GDP), on the continent and is among the top three biggest economies in Africa.
Nigeria has three government-owned refineries but can’t refine what millions of oil its citizens consume daily, rather it exports and buys (or trades) to meet local demands.
Even though Nigeria’s refineries are not functioning, the government allocates billions of naira for its yearly maintenance and payment of workers at the redundant oil firms.
Despite the country’s abundant reserve of oil, it continues to stagger economically.
In Hanke’s words, “When a country’s currency continues to weaken against the most traded currencies like the US Dollar, the currency is said to lose its value, the exchange rate is the major determinant to measure how bad or good a currency is. A lot of factors come into play”.
Severally, experts within and outside the country had advised the federal government to have a unified exchange rate to attract foreign direct investment, reduce inflation, and improve the business-enabling environment.
The recommendations if appropriately implemented in the long-run lead to the appreciation of the Naira against its peers in the FX market.
Nigeria is not alone. Other countries are also in the league of worst-performing currencies. The countries and their currencies include, The Venezuelan Bolivar, Zimbabwean GRTGS Dollar, Lebanese Pound, Sudanese Pound, and Syrian Pound are the top five worst-performing currencies against the US Dollar.
