Naira drops to become the third worst performing currency in the world
The naira has been designated as the third worst-performing currency globally, following a staggering 70% depreciation against the dollar this year.
As of Monday, it weakened by 4.3%, hitting an unprecedented low of 1,670.65 naira per dollar, as reported by Bloomberg.
This sharp decline is largely attributed to a critical 72% reduction in dollar liquidity, which has plummeted to just $81 million—its lowest level in over a month.
Such a dramatic contraction in liquidity exacerbates the existing volatility within Nigeria’s foreign exchange market, complicating efforts to stabilize the naira amid fluctuating oil production and inconsistent foreign exchange inflows.
The combination of these factors illustrates a complex interplay between macroeconomic challenges and structural issues within the financial system. Addressing these hurdles will require strategic interventions to restore confidence and liquidity in the market.
As the situation continues to evolve, close monitoring of economic indicators and policy responses will be essential for understanding future trends in Nigeria’s currency stability.
Finance Minister Wale Edun recently highlighted the urgent challenges facing Nigeria’s economy, stressing that increasing crude oil production is essential for bolstering the country’s foreign exchange reserves and stabilizing the naira.
“We must focus on boosting oil production to support our currency and reserves,” Edun said, underscoring the government’s pressing need to address these economic issues.
Experts have raised alarms about the naira’s troubling downward trend, particularly as the parallel market exchange rate reached ₦1,740 per dollar over the weekend.
In contrast, the Nigerian Autonomous Foreign Exchange Market (NAFEM) displayed some stability, with signs of appreciation. Market participants speculate that the Central Bank of Nigeria (CBN) may soon intervene to alleviate the pressure on the exchange rate.
Proofreading by Uchechi Ojo, Sub-editor at NeptunePrime.
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