The poor run of the naira at the foreign exchange market continued this week as the currency which depreciated by 3.5 per cent on Monday, continued the poor run on Tuesday depreciation to 445 a dollar on parallel market even as it retained its unenviable position as the worst performing currency in Africa in 2016.
The currency took a dive last week at both parallel and official markets, becoming the worst performing currency in Africa in 2016.
The naira on Monday suffered a severe defeat against the dollar in all the major segments of the market. At the interbank segment of the market, the naira lost 53 kobo to close at N308.32, from N307.79 posted on Friday. Economic analysts have argued that the fall in naira is linked to the shortage of dollar supply and the fall in external reserves. “There is shortage of dollar supply.
Diaspora remittances have dropped. This is why you can see the rate dropping at the parallel market,” said Mr. Johnson Chukwu, Chief Executive Officer, Cowry Asset Management Limited. Trading at the Bureau De Change (BDC) showed that the naira lost 5 points to exchange at N445 against the dollar, while it traded for N565 and N480 against the Pound Sterling and the Euro respectively.
The naira also closed at N445, N559 and N484 to the dollar, Pound Sterling and the Euro at the parallel market to become the third worst performing currency in the world for 2016. Nigeria’s naira, according to Bloomberg data, came ahead of only two currencies in the world – Venezulan bolivar and Suriname dollar.
In 2016, the naira has lost 30 per cent of its value on the official market, following the decision of the Central Bank of Nigeria (CBN) to allow for a floating foreign exchange regime on June 20. The naira is now this year’s poorest-performing currency in Africa. Internationally, only the currencies of Venezuela and tiny Suriname have fared worse. The top three performing currencies of 2016 are all universal currencies; silver, gold and platinum, which have gained 45.93 per cent, 25.11 per cent and 22.79 per cent respectively.
These currencies are followed by the Brazilian real, the Russian rubble and the Japanese yen. The best performers in Africa are South African rand, Zambian kwacha, Somali shilling and Botswana Pula, which have gained 8.88 per cent, 8.69 per cent, 5.54 per cent and 4.95 per cent respectively. At the base of the African currencies are the naira, Mozambique new metical, Sierra Leone leone, and the Angolan kwanza. The CBN remains “reasonably optimistic” that the naira would eventually settle at 250 to the dollar at the interbank market.
The local currency has been on the downward swing following a plunge in crude oil prices and a consequent decline in Nigeria’s foreign reserves. How the naira stand vs the currencies of 24 African countries on Tuesday.