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It was learnt that Naira’s peers include Sierra Leone’s Leone, which is down 36%, and the Egyptian pound, which has lost 35%.
 A new report has revealed that Nigeria’s naira is among the world’s
worst-performing currencies, after Ghana’s cedi, which is down nearly
55% this year, and the Sri Lankan Rupee.
Bloombery reported that Naira’s peers include Sierra Leone’s Leone,
which is down 36%, and the Egyptian pound, which has lost 35%.
Nigeria’s economy operates a tightly controlled official rate but
it’s in the parallel market where the exchange rate of the local
currency is largely determined by the level of demand for the dollar.
According to the report, Nigeria’s naira is officially said to be
doing pretty well this year, down just 4% against a strong US dollar,
ahead of the Canadian dollar and the Swiss franc. But that is only a
small part of the story.
The official exchange rate is used only by the government and the
well-heeled — ordinary Nigerians are suffocating under a 37% drop on the
widely-used black market, which most have accepted as a better measure
for the local currency.
Businesses and ordinary Nigerians are feeling the pain. The Naira
volatility is the single largest contributor to the surge in inflation
which is ravaging the economy, taking prices of virtually everything to
the top and causing considerable concern ahead of the year-end
festivities.
Rice, the staple now costs N51,000 a bag, and flight ticket fares are now well out of the reach of most people.
Nigeria’s central bank rations dollars at the official rate,
cutting off access to many businesses and individuals, which in turn
drives demand to the unauthorised black market, leading to a widening
gap between the managed and parallel markets to more than 90%.
While the naira officially closed at 442.75 to the dollar on
Friday, currency traders on the streets of Lagos, Nigeria’s commercial
hub, quoted the greenback at 890 naira, according to Umar Salisu, a
bureau de change operator who tracks the data.
The local unit’s drop in the black market started a day after the
central bank announced last week that it will issue redesigned 200-,
500- and 1,000-naira notes from mid-December in a bid to mop up excess
cash in circulation.
Nigerians are given until January 31 by the apex bank to exchange
the existing bills for new ones, a tight deadline considering that the
central bank estimates that as much as 2.7 trillion naira ($6.1 billion)
sits outside bank vaults.
The report indicated that Nigeria has an average of 4.5 bank
branches per 100,000 people and 45% of adults don’t have a bank account.
The naira’s slump is likely to continue in the near term given low
oil revenue and rising outflows due to uncertainties associated with
February’s presidential election, said Uche Uwaleke, a professor of
finance and capital markets at the Nasarawa State University in central
Nigeria. The dollar is seen as a safe haven.
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