Naira Now Worst Performing Currency In The World, Reason CBN Keeps Raising Interest Rate – Report

Nigeria’s currency, the naira, has emerged as the world’s worst-performing currency in the past month.

This is according to a recent report by Bloomberg.

After performing well and gaining against the US dollar last month and being ranked as one of the best-performing currencies globally as of April 2024, the currency took a downturn this month.

According to the report, the reversal in Naria’s gains has placed increased pressure on the Central Bank of Nigeria (CBN) to continue raising interest rates.

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According to the Bloomberg report released on Friday, the recent development is attributed to the scarcity of USD dollars in the local markets, with only $84 million available on Thursday, half of the previous day’s supply.

The Chief Economist for Africa and the Middle East at Standard Chartered, Razia Khan,
who spoke with Bloomberg, estimated that $1.3 billion in naira futures will mature at the end of this month, potentially dampening market sentiment and expected to create more demands for dollars.

She said, “When the currency appreciated very fast, there had been a bout of profit-taking by offshore investors, and this meant that the dollar-naira exchange rate backed up again.

“This is completely in line with the functioning market.”

Continuing, the report by Bloomberg stated that the naira’s current performance is expected to intensify pressure on the country’s apex bank, leading to the implementation of another rate hike after its upcoming policy meeting on May 21.