- The naira has dropped by 11% in 2023 with half of this change from May 29.
- The naira devaluation and the fuel subsidy removal have aggravated the situation for citizens.
- There could be a solution for the average Nigerian saver/investor desperate to exit the wearing currency.
Recent developments by the Nigerian government are quickly reinforcing a negative sentiment around the naira for long-term holders. These changes could be hurting investors and long-term holders keeping a sizable portion of their portfolio in the local currency.
Despite extreme attempts by Nigeria’s apex bank to curb the exchange rate, the local currency has continued to depreciate steadily. A chart from cryptocurrency exchange, Binance, reveals that the naira has weakened by almost 11% against the dollar since January. Half of this depreciation was recorded in the last 48 days. The naira unification announcement of the country’s local currency was a major contributor to the steep decline. On May 29, which was the inauguration day of the country’s 16th democratic president, Bola Ahmed Tinubu. His speech referred to the unification of the country’s multiple exchange rate which caused temporary market panic before a recovery.
NGN/USD pair | Source: Binance
At the time of writing the naira has stood at N812 against the dollar since floating. Inflation on the other hand has intensified since the subsidy removal thereby eroding the worth of wages for Nigerians. The pump price for PMS rose to N540/litre from N195/litre. This increment quickly sent shock waves across every sector of the country’s economy in addition to the desperate situation. Although the cost of living has already doubled, there is a good chance that these changes are yet to be fully priced into the inflation figures.
In light of these fast-changing realities, it may be wise for Nigerians to reduce long-term exposure of their savings/portfolio to the Naira. Most importantly individuals would need to take more proactive steps to ensure that they cushion the aggressive effects of the coming aftermath.
What do you think the exchange rate would be for the NGN/USD pair by December? Drop your thoughts in the comment section below.
