A United States-based media organisation, Bloomberg, has predicted that Nigeria’s currency, naira, will suffer further depreciation in 2024.
Bloomberg said the naira is poised for its worst year since the return to democracy in 1999, adding that Nigeria’s currency is the third worst-performing currency in the world.
The financial media organisation said this in a report on Friday, December 29, 2023.
It said the naira fell 55 per cent in 2023 to N1,043 per dollar as of Thursday, December 28, making it the world’s worst performer after the Lebanese pound and the Argentine peso among 151 currencies tracked by the media orgsanisation.
Bloomberg added: “And that’s in the official market. On the streets, the currency trades at 1,208 naira per dollar.
READ ALSO: Naira exchanges at N1,043 against dollar at FX market
“Foreign reserves in Africa’s biggest crude producer are at the lowest in six years with most of them encumbered by overdue short-term overseas obligations.
“Unless President Bola Tinubu’s government lures international investors or ramps up oil output, the naira may slip further, according to Vetiva Capital Management Ltd.”
In the non-deliverable forwards market, Bloomberg said the naira’s 12-month contract is trading near a record low of N1,294.44 to the dollar.
“It’s clear that further devaluation – alongside tighter monetary policy – is needed to reduce imbalances in the FX market,” it quoted a senior economist at Tellimer Ltd, Patrick Curran, as saying.
The media firm noted that the depreciation began after the Central Bank of Nigeria (CBN) allowed the naira to trade more freely in June and President Tinubu scrapped petrol subsidy.
Bloomberg said the naira depreciation and the removal of petrol subsidy fueled inflation, which is at 28.2 per cent, while the benchmark interest rate is at 18.75 per cent.
“The negative real interest rate has dissuaded overseas investors,” it added.
According to Bloomberg, a significant rise in external reserves, material increase in foreign exchange inflows, and reduction in money supply will be positive for the naira.
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