Currency Performance in Nigeria and Kenya in the First Half of 2024

During the initial six months of 2024, there was a significant contrast in the performance of two African currencies, namely the Nigerian Naira and the Kenyan Shilling. The Naira experienced a substantial depreciation of approximately 40%, marking it as the poorest performer in that period. This decline was primarily attributed to a scarcity of the U.S. dollar, which impacted the currency adversely.

Naira's Continuous Decline

The Naira's value against the U.S. dollar deteriorated continuously for nine consecutive days, leading to its unfavorable ranking as the weakest currency in the first half of 2024. Reports from Bloomberg highlighted the influence of U.S. dollar shortages in driving this downfall. Despite the Central Bank of Nigeria's efforts to stabilize the currency through aggressive interest rate policies, the flow of foreign capital remained unresponsive, further exacerbating the Naira's downward spiral.

Following a swift devaluation in the first quarter of 2024, Nigerian authorities responded by implementing various measures to curb the decline. These actions included imposing restrictions on cryptocurrency exchanges and cracking down on currency speculators utilizing peer-to-peer crypto trading platforms. Notably, these regulatory measures resulted in the apprehension of Binance executives associated with these activities.

Initially, the interventions led to a recovery, erasing the substantial losses incurred earlier and positioning the Naira as the top-performing currency nearing the NGN1,000 per dollar threshold. However, this resurgence proved to be short-lived as by the end of June, the Naira's value plummeted to approximately NGN1,500 per dollar, classifying it as the poorest performer among currencies monitored by Bloomberg.

Kenyan Shilling's Remarkable Growth

In stark contrast, the Kenyan Shilling exhibited exceptional performance globally during the first half of 2024. With an impressive appreciation of 20.7% throughout the year, it claimed the title of the best-performing currency in this period. The favorable trajectory of the Kenyan Shilling underscored its strength and stability amidst the turbulent currency market.

Data from the report also shed light on other African currencies' performances. The Egyptian pound emerged as the second-worst performer, while the Ghanaian cedi experienced a noteworthy depreciation of 21.8%, positioning it in the third spot.

Conversely, the Zambian kwacha demonstrated a gain of 6.9% year-to-date, securing the third-best performer position alongside the Kenyan Shilling's remarkable ascent.

The future trajectory of Nigeria's currency remains uncertain, with experts emphasizing the importance of stabilizing foreign exchange inflows to potentially witness an appreciation in its value. The contrasting fortunes of the Naira and the Kenyan Shilling reflect the diverse economic landscapes within the African continent during the initial half of 2024.