Nigeria’s naira has been on a tear this year, and it could extend its winning streak if policymakers continue to make the right moves.
According to a Goldman Sachs Group Inc. economist, the naira could continue to gain ground against the dollar in the coming weeks. This is a remarkable turnaround for the currency, which has been one of the worst performers in recent years.
In April alone, the naira has surged by 12% against the dollar, building on a 14% rally in March. This makes it the best-performing currency in the world this month.
What’s driving this surge? Capital inflows and interest rate increases are helping the naira to retrace steep losses caused by two devaluations since June. The Nigerian government has also loosened currency controls, which has helped to boost confidence in the naira.
However, the Goldman Sachs economist warns that the naira’s gains are not guaranteed. Policymakers must stay on track and continue to make the right decisions to keep the currency’s momentum going.
If they can do this, the naira could continue to be a bright spot in Nigeria’s economy, which has been struggling with high inflation and a slowdown in growth.
Overall, the naira’s recent performance is a positive sign for Nigeria’s economy, and it could signal a turnaround in the country’s fortunes. However, there are still challenges ahead, and policymakers must remain vigilant to ensure that the naira’s gains are sustainable.
