Kenya and Nigeria get relief as their national currencies strengthen against the US dollar

From ranking as the world’s worst-performing currencies in 2023, the Kenyan shilling and Nigerian naira have made significant progress. They are now among the best-performing currencies in the world for 2024, raising hopes for a lower cost of living in these countries.

By Conrad Onyango, bird story agency

Squeezed by painfully high prices for over a year, households in Kenya and Nigeria are beginning to get some relief as their national currencies strengthen against the US dollar and the cost of living starts to come down.

In 2023, the shilling and naira were ranked among the worst-performing currencies in the world, according to data from Bloomberg and World Currency Monitor.

The naira was the worst-performing currency in Africa in 2023, depreciating by over 40% against the US dollar while the shilling ranked 6th worst worldwide, with a slump of over 15% against the US Dollar.

However, consumers in both countries are in for some relief in 2024 as their currencies gain ground and the cost of living becomes more bearable, especially in Kenya which has witnessed drops in the prices of some key foods and fuel.

Kenya’s National Bureau of Statistics shows that the country’s annual inflation eased to a two-year low thanks to a strengthening shilling, which has helped to lower import prices. Kenya is a net importer.

Consumer prices rose 5.7% in March in the East African country, compared with 6.3% in February and 9.2% in March 2023,  driven by falling prices for flour, sugar and fuel, according to the Bureau of Statistics. Flour dropped by 9.2%, Sugar 5.3% and petrol by 3.5%.

Kenya’s inflation is now within the government’s preferred range of 2.5% and 7.5% in the medium term.

On the eve of Good Friday, Kenya’s commercial banks quoted the shilling at a high of 132.00 to the US dollar, compared to a high of 161.00 at the start of the year.

Such robust performance has earned the shilling the title of best-performing currency in 2024, according to Bloomberg research.

The naira is also on a winning streak, posting N1,300 against the dollar on the eve of Easter celebrations after a historic low of N1,851 per dollar In February.

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The country had been grappling with dollar shortages that depressed its currency.

Nigeria’s central bank Governor Olayemi Cardoso has expressed hope that the naira will continue to gain strength against the dollar after clearing a foreign exchange backlog and raising interest rates by 200 basis points to 24.75% to counter inflation.

“The committee noted with satisfaction the level of stability achieved in the foreign exchange market in the last few weeks…This will greatly enhance investor confidence and attract foreign investments to Nigeria,” said Cardioso during its latest Monetary Policy Committee (MPC) Press Briefing.

“These considerations underscore the importance of CBNs commitment to the price stability mandate and the need to urgently bring inflation under control to ensure that purchasing power of ordinary Nigerians is restored in the short to medium term,” Cardioso added.

Nigeria’s apex bank has intensified oversight of the recapitalisation of banks and other financial services firms, which it believes will strengthen the country’s financial system against external shocks. The regulator has also cracked down on unregulated cryptocurrency trading.

bird story agency