Naira Is “World’s Best Performing Currency” In April, Bloomberg

Nigeria’s naira has emerged as the world’s best-performing currency this month, according to a Goldman Sachs Group Inc. economist, with a potential for further gains if current policies are maintained. The naira has appreciated 12% against the dollar in April, building on a 1% increase in March. This recovery follows a period of significant depreciation, where the currency lost 71% of its value due to two devaluations since June, after the government relaxed currency controls.

The recent rally has brought the naira to 1,230 per dollar from a record low of 1,627 on March 8. Goldman Sachs, which had previously forecasted the naira to strengthen to 1,200 per dollar by 2024, now sees potential for it to reach or even surpass this level sooner, thanks tFebruary and

The Central Bank of Nigeria, under the leadership of Governor Olayemi Cardoso, has taken decisive steps to stabilize and strengthen the naira. These measures include significant interest rate increases aimed at attracting foreign investment and easing the local dollar scarcity that had contributed to the currency’s volatility. Cardoso, who assumed office in September, succeeded Godwin Emefiele, who faced allegations of wrongdoing.

The central bank’s next policy meeting is scheduled for May 21, with the current interest rate at 24.75%. Despite the positive impact of these policies on the naira’s value, they have also led to a spike in inflation, reaching a 28-year high and exacerbating a cost-of-living crisis in Nigeria.

Economic Reforms and Challenges

The currency’s rebound is part of broader economic reforms initiated by President Bola Tinubu, aimed at ending years of economic stagnation. These reforms, including the controversial scrapping of fuel subsidies, have had mixed effects, with inflation soaring but also signs of economic revitalization.

The naira’s performance and the central bank’s policies reflect a delicate balance between attracting foreign investment and managing domestic economic pressures. Goldman Sachs’ Andrew Matheny expressed cautious optimism about the sustainability of these policies, highlighting the challenges of maintaining reform momentum and the social implications of high inflation.