Ghana, Nigeria Contest World’s Worst Currencies
The Nigerian naira and Ghana’s cedi have been ranked as the world’s two worst-performing currencies, with the naira losing 37 per cent of its value against the dollar and the cedi losing 55 per cent.
According to Bloomberg, while the naira was performing pretty well against the dollar at the official market, the country’s currency had fallen by 37 per cent at the parallel market, making it the second worst-performing currency behind the Ghana cedi.
Although Nigeria’s official exchange rate is strictly regulated, at the black market, the value of the nation’s currency is largely determined by the level of demand for the dollar, which has been very high due to the country’s strict regulatory policies against the circulation of the dollar in the country.
The naira’s depreciation has continued in the wake of the Central Bank of Nigeria’s decision to redesign the currency and the long-standing ban on Bureau De Change operations.
Godwin Emefiele, the governor of the central bank, declared in October that new naira notes would be released by December 15.
However, experts have predicted that the currency’s depreciation is likely to continue in the short term given the CBN’s announcement of plans to restructure the country’s currency, the prolonged ban against BDC operators, the low oil revenue, and the increased outflows due to uncertainty surrounding the upcoming presidential election.
In order to halt the country’s currency’s rapid depreciation, the CBN in 2021 outlawed the sale of foreign exchange to BDC operators. The central bank accused the BDCs of making illegal foreign exchange sales above the market they were authorised to serve.
Before the ban, BDC operators were an important part of the black market, assisting people who couldn’t lawfully get foreign currencies directly from the CBN to maintain their exchange rates.
Peoples Gazette reported that the naira traded at N890 against the dollar on Saturday, an unprecedented rise from the N700 mark which it traded between September and early October.
With the rate at which the value of the currency is falling, experts have also predicted that before the end of the year, the naira will exchange at N1000 to the dollar.
In October, the Ghanaian cedi was rated as the worst performing currency in the world after it lost 45.1 percent of its value to the U.S. dollar this year.