In a turbulent start to 2024, the Nigerian Naira has faced significant depreciation, plunging by more than 40% in the foreign exchange market during the first half of the year, according to data from FMDQ.

The currency weakened to N1505.30 per dollar by the end of June, a contrast from its previous stability closing between N896.6 and N907.11 in December 2023.

The Naira’s journey through the year has been marked by volatility, despite several months of appreciation earlier in the year.

It reached its highest peak at N1, 665.50 in February, only to plummet to lows of N1, 140 and N1, 230.61 at the official and parallel markets respectively by April.

This instability coincides with a series of policy measures by the Central Bank of Nigeria aimed at reforming the foreign exchange market.

These include efforts to unify the FX market, new guidelines for International Money Transfer Operators, interventions for Bureau De Change operators, regulations on excess FX to banks, and the recent withdrawal of the Price Verification System Portal for importers.

Despite these reforms, the Naira has struggled to maintain its value against the Dollar and other major currencies.

In April 2024, it was hailed as the best-performing currency, only to be dubbed the worst-performing by May.

As of the latest reports, the Naira closed at N1505.30 and N1515 at the official and parallel markets respectively on Friday. This development unfolds against the backdrop of Nigeria’s external reserves, which stood at $34.07 billion as of June 26, 2024.

Also, the naira has emerged as the worst-performing currency in the world in the first half of 2024.

According to a report by Bloomberg on Friday, devaluation, insufficient dollar liquidity, and market volatility have hindered efforts by the CBN to strengthen the currency.

Besides the naira, Egypt’s pound and Ghana’s cedi were the world’s other worst performers in the first six months of the year.

Tracking data from FMDQ, Bloomberg said that the naira weakened for a ninth straight day to N1, 510 per dollar by the close on Thursday.

“The losing streak is the longest since July 2017 and takes the decline since the start of the year to 40 per cent.

“The naira’s performance is the worst among global currencies tracked by Bloomberg beside that of the pound in Lebanon, which is undergoing an economic crisis and witnessing dollarisation,” the report noted.

Providing an update on the currency, the Head of Africa Strategy at Standard Chartered Bank Plc, Samir Gadio, in an email said, “While the naira is undervalued and has seen significant adjustment, the supply of dollars needs to improve for the currency to be supported.

“Portfolio inflows have yet to pick up, even amid still-attractive local rates.

“What will matter going forward is whether it can stabilize on improving foreign exchange inflows and perhaps see some appreciation.”

According to PwC in its latest economic report on Nigeria, the naira depreciated against the dollar by 67.8 percent from an average of N461.1 in May 2023 to N1, 433.80 in May 2024.

“The depreciation took effect despite foreign exchange market reforms by CBN to achieve price discovery and attract liquidity to the market,” PwC said.

In March, the naira had emerged as the best-performing currency in the world, a feat which was reversed the next month.

Bloomberg added that the currency was volatile between mid-April and May due to the imbalance between demand and supply for the greenback before the trend moderated in June on an improvement in dollar inflows.

Meanwhile, earlier last week, the CBN Governor, Olayemi Cardoso, stated that the worst of the naira’s volatility may be over.

The naira has traded in a narrow range between N1, 473/$ and N1, 485/$ this month, according to FMDQ data compiled by Bloomberg.

That has sent its 10-day rolling volatility to the lowest in a year and its 100-day swings to the least since November.