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Nigerian Naira Ranked 4th Worst Performing Currency in Africa

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Naira - Investors King

The Nigerian Naira ranked fourth among the worst performing currencies in Africa since January 2022, a report by Steve Hanke, a Professor of Applied Economics and Director of the Troubled Currencies Project in the United States, has shown.

Hanke’s currency watchlist is a list of currencies that have depreciated by at least 20% against the dollar since January 2020.

According to the recent ranking released by Hanke, the Zimbabwean dollar tops the list as the worst-performing currency in Africa against the United States dollar. The Zimbabwean dollar has depreciated against the United States Dollar (USD) by 97.33% since January 2020.

Hanke in a tweet said, “Zimbabwe must dump the Zim dollar and adopt the USD immediately.”

The Sudanese pound comes second on the list of the worst-performing currencies in Africa. The Sudanese pound has depreciated against the USD by 84.95% since Jan 2020. According to Hanke, the only way to save Sudan’s pound & its economy is to install a currency board.

South Sudan ranks third on the list after the country’s currency depreciated against the U.S Dollar by 50.79% since January 2020.

The Nigerian Naira appeared on the list as the 4th worst performing currency in Africa and 11th globally. The currency’s value has depreciated against the U.S Dollar by 48.87% since January 2020.

The Ghana Cedis comes 5th on the list of worst-performing currencies in Africa. According to Hanke, the Ghanaian cedi has depreciated 42.57% against the USD since January 2020.

Kwacha, the Malawi currency ranks 6th on the list of worst performing African currencies. The kwacha has depreciated against the United States Dollar by 39.54% since January 2020.

Sierra Leone Leone comes in 7th place on the list of worst performing currencies in Africa. The leone has depreciated against the USD by 31.23% since January 2020.

Investors King had previously released a list of African countries with the highest food inflation, with Zimbabwe topping the list with 309%, with Nigeria ranking 11th with 22.02% food inflation.

With the recent happenings in the country, the Nigerian Naira value continues to decline, leaving the Central Bank of Nigeria struggling to address the declining foreign revenue inflow, drop in oil production and oil theft.

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Naira

Naira Trades at N737/$ on Black Market Amid Scarcity, Campaign Activities

The Nigerian Naira depreciated to N737 against the United States Dollar at the parallel market, popularly known as the black market, on Thursday following the Independent Electoral Commission (INEC) decision to lift the ban on campaign activity.

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Naira Exchange Rates - Investors King

The Nigerian Naira depreciated to N737 against the United States Dollar at the parallel market, popularly known as the black market, on Thursday following the Independent Electoral Commission (INEC) decision to lift the ban on campaign activity.

Checks by Investors King showed that persistent dollar demand by politicians amid scarcity are two main factors impacting the exchange rate on the black market.

The President, Association of Bureaux de Change Operators of Nigeria, Alhaji Aminu Gwadabe, disclosed that elections, loss of confidence, and the force of demand and supply are what is driving the market at the moment. 

“It is a market where demand and supply determine the price. Do not forget that election years are associated with foreign exchange volatility”, he noted. 

A parallel market operator our correspondent spoke to in Abuja on Thursday evening quoted Naira at N737 to a dollar. This was different from what was quoted in the morning. The dollar was sold for N735 in the morning of the same day. 

Abba Muhammed said he would buy dollars at the rate of N733 and sell at N737. It could be recalled that the dollar was sold at N728 on Wednesday. 

Investors King understands that dollar was traded at N707 to a dollar at the beginning of September. This represents a difference of N30 (4.2 percent). 

On the other hand, the dollar to naira exchange was significantly stable at the Importer and Exporter (I&E) Window at N430 to one dollar. 

It is widely believed that political activities leading to the next year’s elections will further decrease the value of the naira against the dollar. Analysts opined that politicians will scramble to stack dollars ahead of the 2023 elections. 

The electoral commission has fixed the 26th of February and 11th of March for the 2023 general elections. 

Meanwhile, Nigeria’s forex reserves barely stood above $39 billion on Thursday which was a drop of about

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Naira

Naira to Dollar Exchange Rate Dips to N707 at the Black Market

The Nigerian Naira exchanged at N707 to a United States Dollar on the black market, a N2 decline from N705 it traded on Tuesday.

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NAIRA - Investors King

The Naira to Dollar exchange rate remained under pressure as of Wednesday, September 14, 2022, amid Nigeria’s persistent foreign exchange scarcity.

The Nigerian Naira exchanged at N707 to a United States Dollar on the black market, a N2 decline from N705 it traded on Tuesday.

At the Investors & Exporters (I&E) forex window, the Naira opened at N434.75 against the United States Dollar on Tuesday before shedding 0.11% to N436.04. Currency traders at the window (I&E) traded $83.71 million worth of currency on Tuesday.

At the Central Bank of Nigeria‘s (CBN) managed interbank forex section, the Naira was sold at N428.81 to a U.S Dollar on Tuesday. The Pounds Sterling – Naira exchange rate was  N502.9512 while the Euro traded at N436.4857.

Crude Oil

Oil prices traded lower on Wednesday as uncertainty surrounding interest rates continues to dictate demands for the commodity.

The brent crude oil, against which Nigerian oil is priced, dipped to $92.83 a barrel while the U.S. West Texas Intermediate crude oil shed 0.37% to $86.99 a barrel.

On Tuesday, U.S. data showed the inflation rate rose to 8.3% in the month of August, a strong indication that inflation pressures remain stubborn in the world’s largest economy. This coupled with European Central Bank’s comments that it will continue to raise interest rates to curb rising prices weighed on oil prices on Wednesday.

Energy investors have started lowering the outlook projections, saying rising prices would impact demand for the commodity as global economic growth slowdown.

Cryptocurrency

Like every other asset, cryptocurrency extended its decline on Wednesday ahead of Ethereum merge and transition from Proof of Work to Proof of Stake.

Bitcoin, the world’s most dominant cryptocurrency lost 3.25% to N14.65 million, or $20,250.25 per coin. While Eth, the token of the Ethereum protocol appreciated by 0.41% to N1.131 million or $1,597 a coin.

Earlier this week, cryptocurrency appreciated across the board. However, the reports that there is an arrest warrant against Do Kwon, the co-founder of the now defunct stablecoin issuer Terraform Labs, from the financial crimes unit of the Supreme Prosecutors’ Office of South Korea weighed on the cryptocurrency outlook.

 

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CBN Uses $7.6 Billion to Defend the Nigerian Naira in Five Months

The Central Bank of Nigeria (CBN) has said a total sum of $7.6 billion was used to defend the Nigerian Naira in the first five months of the year.

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Naira Exchange Rates - Investors King

The Central Bank of Nigeria (CBN) has said a total sum of $7.6 billion was used to defend the Nigerian Naira in the first five months of the year.

The bank stated in its recent monthly economic report accessed by Investors King.

In January, February and March, CBN intervened in the forex markets with $1.65 billion, $1.39 billion and $1.82 billion, respectively. This continues in the months of April and May.

The apex bank pumped $1.56 billion into the economy in April and expended another $1.318 billion in May to prop up the value of the Nigerian Naira against its global counterparts.

Despite the $7.6 billion, or N3.25 trillion (using the official exchange rate) spent in sustaining the Naira value, the local currency has shed over 100% of its value this year alone and it is presently being exchanged at over N700 to a United States Dollar at the black market.

Nigeria has official exchange rates used by the CBN and the Deposit Money Banks (DMBs), and the unofficial exchange rates, popularly available, at the black market — the main forex section patronise by most Nigerians in need of forex for various reasons.

At the CBN interbank foreign exchange section, the Nigerian Naira was sold at N428.1 to a United States Dollar to DMBs allowed to deal directly with the CBN. Presently, the Naira is exchanged at N710 to a United States Dollar on the black market. Suggesting that the unofficial rate is 65.84% higher than the CBN official rate. 

The International Monetary Fund (IMF) and the World Bank have advised Nigeria to stabilise and unify its exchange rates.

Investors King earlier reported that the World Bank President, David Malpass admonished Nigeria on currency stabilisation when he met with the Vice President, Yemi Osinbajo last week in the United States. 

Talking about the issue, Malpass stressed the economic benefits of unifying the exchange rates and the significance of stabilisation to Nigerians.

He disclosed that a unified exchange rate will significantly improve the business-enabling environment in Nigeria, attract foreign direct investment, and reduce inflation. 

Malpass also advised Nigeria on the importance of increasing its domestic revenue by enlarging the country’s tax net through improved efficiency in tax administration. 

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