The World Bank has identified the Nigerian naira as one of the poorest-performing currencies in Africa, with a nearly 40% depreciation against the US dollar since its devaluation in June.
This information was detailed in the World Bank’s report titled, “Africa’s Pulse: An analysis of issues shaping Africa’s economic future (October 2023 | Volume 28).”
The report stated, “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.”
Additionally, the report highlighted other African currencies that have suffered significant losses in 2023, including South Sudan (33%), Burundi (27%), the Democratic Republic of Congo (18%), Kenya (16%), Zambia (12%), Ghana (12%), and Rwanda (11%).
The report also noted that parallel exchange market rates are contributing to inflationary challenges in some African countries.
In June 2023, the Central Bank of Nigeria (CBN) directed Deposit Money Banks to eliminate the rate cap on the naira at the official Investors and Exporters’ window of the foreign exchange market, allowing the naira to freely float against the dollar and other global currencies.
Since then, the naira’s official exchange rate has depreciated from N473.83/$ to around N800/$.
| TheGuardian
