In the first half of 2024, the Nigerian currency, the naira, suffered a significant depreciation of almost 40%, making it the worst-performing currency in that period. This decline was primarily attributed to U.S. dollar shortages in the country. In contrast, the Kenyan shilling experienced a significant appreciation of 20.7%, making it the best-performing currency during the same period.
The depreciation of the naira was a cause for concern for many Nigerians, as it led to an increase in the cost of living and a decrease in their purchasing power. The falling value of the currency also had a negative impact on the country’s economy, as it made imports more expensive and reduced the value of foreign investments in Nigeria.
During this period, the naira fell for nine consecutive days against the U.S. dollar, reaching a new low. This downward trend was exacerbated by the country’s reliance on oil exports, which were adversely affected by the global economic slowdown and a decline in oil prices.
As a result of the naira’s depreciation, the Nigerian government faced mounting pressure to implement measures to stabilize the currency and boost investor confidence. In response, the Central Bank of Nigeria took steps to shore up the naira’s value, including tightening monetary policy and increasing foreign exchange reserves.
Despite these efforts, the naira continued to face challenges in the forex market, as demand for the currency remained high while the supply of dollars was constrained. This imbalance in the forex market contributed to the naira’s continued depreciation and heightened uncertainty among investors and consumers alike.
In contrast, the Kenyan shilling’s appreciation was driven by strong economic fundamentals, including robust export performance and an increase in foreign investment inflows. These factors helped to boost the shilling’s value against major currencies, including the U.S. dollar, and position Kenya as one of the top-performing economies in Africa during the first half of 2024.