LIST | The Nigerian Naira Will Be the Most Affected Currency in Africa in 2023 as It Devalues
Nigeria’s Naira was the third worst-performing currency in the world in 2023, according to a Bloomberg report.
The Naira’s poor performance is shared by the Lebanese pound and the Argentine peso among the 151 currencies that Bloomberg monitors. Three days remained in 2023 before the Naira closed at N1,043 to the dollar.
The Angolan Kwanza, Malawian Kwacha, Zambian Kwacha, Burundina Franc, Congolese Franc, and Kenya Shilling are among the ten currencies that saw the greatest devaluation globally in 2023. African currencies make up the majority of Bloomberg’s list of currencies that underperformed.
The graph shows how much these currencies have declined in value relative to the US dollar over the last year (2023). The Nigerian Naira (NGN), which was at the top of the pack, fell by a substantial 55%.
The Naira’s performance in 2023 has been called its worst since the return to democracy in 1999, despite financial analysts’ predictions that it may fall even further in 2024.
The decision by the new administration, led by President Bola Tinubu, to adopt a floating exchange rate for the currency is to blame for the sharp depreciation of the Naira. The Central Bank of Nigeria (CBN) formally declared in June 2023 that the Naira’s rate cap would be lifted at the Foreign Exchange Market’s Investors and Exporters (I&E) Window.
Furthermore, as his first major policy action as president, Tinubu eliminated fuel subsidies soon after taking office in May 2023. This choice had the dual effect of depreciating the nation’s currency and driving inflation to previously unheard-of heights.
Similar to Nigeria, policies like the elimination of fuel subsidies and tax increases made Kenya’s economic problems worse.
In November 2023, the Central Bank of Malawi declared that the value of the local Kwacha currency in relation to the US dollar would be devalued by about thirty percent. The notice stated that instead of the selling rate of roughly 1,180 Kwacha to the Dollar, the adjusted exchange rate for the Kwacha would be set at 1,700 Kwacha to the Dollar.
