FILE PHOTO: A person holds a new 1000 Naira note as the Central Bank of Nigeria releases the notes to the public through the banks in Abuja, Nigeria, December 15, 2022. REUTERS/Afolabi Sotunde

Nigerian Naira Experiences Second Devaluation in 7 Months, as it Loses 98% Value

The Nigerian Naira is facing its most challenging period since the return to democracy in 1999, with analysts predicting further depreciation in 2024. The currency has experienced a significant decline, plunging 55% in the official market and trading at 1,208 naira per dollar on the streets, making it one of the world’s worst performers.

The recent devaluation, which saw the naira depreciate by 31% to 1,413 naira to a dollar, brings it closer to the parallel-market rate of around 1,450, following a devaluation of almost 30% in June.

This downward spiral has been attributed to factors such as inadequate dollar liquidity, volatility in the exchange rate, and the need for further devaluation, according to analysts.

PwC’s report indicating that the naira has lost 98% of its value following President Tinubu’s economic reforms underscores the severity of the situation. The continuous devaluation of the naira has far-reaching implications for the Nigerian economy, including its impact on businesses, foreign investment, and the cost of living for citizens.

The country’s foreign reserves, which stand at a six-year low of $32.8 billion, further highlight the economic challenges facing Nigeria. The Central Bank of Nigeria’s response to the devaluation and its efforts to address the underlying issues will be crucial in determining the naira’s future trajectory.

The recent revision of the methodology used in effecting the devaluation, following the central bank’s accusation of exchange rate manipulation by traders, reflects the complexity of the situation.

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