The performance of the naira against the US dollar has been ranked as the 11th worst in the world and the fourth worst in Africa. The second worst-performing currency in the world is the Zimbabwean RTGS dollar, which has lost 99.33% of its value in comparison to the US dollar. The worst-performing currency, with a depreciation rate of 99.39%, was the Venezuelan Bolivar. Even though the Nigerian naira is nominally performing well this year—down just 4% against a strong US dollar and ahead of the Canadian and Swiss dollars.
According to the report, this is only a small portion of the story because the official exchange rate is only used by the government and the wealthy, while common Nigerians are suffering from a 37% decline on the widely accepted black market, which most people view as a more accurate gauge for the local currency. “That places it among the worst-performing currencies in the world, behind the Ghanaian cedi, which is down nearly 55% this year, and the Sri Lankan rupee.
The Egyptian pound has lost 35%, and Sierra Leone’s currency has dropped 36%, according to the report, according to Bloomberg. The official exchange rate in the largest economy in Africa is strictly regulated, but on the black market, the value of the local currency is largely determined by the level of demand for the dollar.
What this means
Nigerian businesses and common citizens are suffering. The surge in inflation that is ravaging the economy, driving up the cost of almost everything, and raising serious concerns ahead of the year-end celebrations is primarily caused by the Naira’s volatility.
The price of the staple food, rice, has increased to N51,000 per bag, and flight costs have increased significantly.
What to expect
It is challenging to make any meaningful plans when commodity prices are unstable. Trade volume has decreased as a result of the increased poverty and crime rates in some nations. Graduate unemployment rises and Government spending on infrastructure and foreign direct investments is reduced