The Nigerian naira has been identified as one of the worst-performing currencies in Sub-Saharan Africa in 2024, according to the World Bank's latest "Africa's Pulse" report.
As of August 2024, the naira had depreciated by approximately 43% year-to-date, placing it alongside the Ethiopian birr and the South Sudanese pound as one of the weakest currencies in the region. This decline is largely attributed to a surge in demand for U.S. dollars in Nigeria's parallel market, compounded by limited dollar inflows and slow foreign exchange disbursements from the central bank.
The report notes that financial institutions, non-financial end-users, and money managers driving the demand for dollars have further pressured the naira. Despite recent reforms in Nigeria's foreign exchange market, including the liberalization of the official exchange rate in June 2023, these measures have not stabilized the currency.
Broader economic challenges, such as dwindling foreign reserves and inflationary pressures, have worsened the naira's situation. The currency's depreciation has significantly affected domestic prices, particularly for imported goods, creating more difficulties for Nigerian consumers.
However, there was a slight recovery noted on October 14, with the naira appreciating by 5.69% against the dollar, improving from N1,641.27/$1 to N1,552.92/$1. Despite this improvement, foreign exchange turnover saw a significant drop of 44.27% during the same period, indicating ongoing challenges in the currency market.