The naira’s journey in 2024 has been marked by significant volatility and fluctuation against the US dollar, showcasing both strong rallies and steep declines within a short period. Initially touted as the best-performing currency by Goldman Sachs in April, with predictions of potential further strengthening to trade below ₦1,000/$ within 12 months, the currency took a dramatic turn.
By mid-year, Bloomberg reported the naira as the worst-performing currency globally, citing factors such as devaluation, insufficient dollar liquidity, and market volatility as primary contributors to its decline. The currency weakened consistently, facing a nine-day losing streak in late June, closing at ₦1,510 per dollar. This decline represented a 40% depreciation since the beginning of the year, marking it as the most prolonged losing streak since July 2017.
Despite earlier optimism and efforts by the Central Bank of Nigeria (CBN) to stabilize the currency through market reforms aimed at enhancing liquidity and price discovery, the naira struggled amid persistent challenges in the foreign exchange market. These challenges included imbalances between supply and demand for dollars, contributing to periods of intense volatility.
The contrast between initial optimism and subsequent challenges underscores the complex dynamics influencing Nigeria’s currency markets, reflecting broader economic uncertainties and policy impacts on exchange rate stability. As such, the naira’s performance continues to be closely monitored amid ongoing efforts to address underlying economic fundamentals and strengthen market resilience.