Naira Spot Return Tops in Africa
Kunle Harmony
Naira spot return has emerged the highest in Africa, indicating that the Central Bank of Nigeria is effectively managing the national currency despite two rates adjustments this year alone with convergence of the naira rates within sights, ThisNigeria Intelligence Group finds.
The spot rate is the price quoted for immediate settlement on a commodity, a security or a currency. The spot rate, also referred to as the “spot price,” is the current market value of an asset at the moment of the quote.
Spot market return for the naira hit 1.44 recently, Bloomberg data shows. It is the highest return for a currency against the dollar on the continent out of the 19 currencies followed by Bloomberg.
The Rwandan Franc returned 1.21 to become the currency with the second highest spot return. The Ethiopian Birr is third with return of 0.4. The South African Rand is the least performer despite being the second largest economy on the continent after Nigeria. It recorded a return of -0.61. This is lower than the return of Zambian Kwacha with a return of -0.54 and Malawian Kwacha with a negative spot return of 0.35.
It may be recalled that the Central Bank adjusted the exchange rate of the naira to the dollar from N361 to N379. This follows an earlier 15 percent adjustment to N360 per dollar from N307. The rate for foreign portfolio investors was also altered, to N380 per dollar from N366 with the ultimate aim of converging the multiple exchange rates aimed to control demand for dollars following the collapse of oil prices in 2014.
Meanwhile, four years ago, spot market returns tracked on the Bloomberg’s World Currency Ranker (WCRS) on August 23 2016 indicates that the naira returned -39.43 percent to emerge the worst performing currency. Trailing the naira was the Sierra Leonean Leone with negative returns of -31.01 percent.
Another African currency, the Guinean Franc delivered the third worst return of minus 18.76. It was followed by yet another African currency, the Mozambique New Metical with losses of -15.43 before an entry of the Mongolian Tugrik (-13.50 and Azerbaijani Manat (-9.54).
