As the Nigerian Naira records its worst performance yet against the US dollar in weeks as US dollar liquidity in Nigeria plunges, bitcoin continues to rally ahead to within its All-Time High (ATH) levels of $73,737 from April and in some P2P exchanges, according to data from monierate, reaching the ATH in Nigeria already, at N121m.
Recent Naira-USD Performance
The Naira has yet to find stability against the US dollar despite several forex market reforms, such as the free-floating of the Naira. However, First Securities Discount House (FSDH) Merchant Bank Ltd’s macroeconomic report highlights that critical drivers such as “a rise in foreign exchange (forex) inflows, driven by increased policy rates and heightened FX interventions from the Central Bank of Nigeria (CBN)” could push us closer to that reality.
The Naira is currently at ₦1,711.774 to the US dollar, based on data from monierate, following a 72% freefall to $81m in US dollar liquidity, according to reporting from Bloomberg, its lowest level in months, marking its worst performance yet in weeks.
Moreover, the recent World Bank report, Africa’s Pulse, noted that the Naira, the Ethiopian Birr, and the South Sudanese Pound are among the worst-performing Sub-Saharan African currencies of 2024. The report cites factors driving the Naira’s 43% year-to-date depreciation, as primarily the surge in demand for the US dollar, limited US dollar liquidity and inflows, and delays from the CBN in forex disbursements.
The Bitcoin Rally & Stablecoin Adoption Rise
Meanwhile, bitcoin continues to build off its September rise and is steadily approaching a new ATH. It has already appreciated ~12% over the last half year and 66% year-to-date.
Beyond the ETFs, there are other macro factors at play here, including the market’s anticipatory exuberance ahead of a potential Trump victory in the US election and the consequences for bitcoin, given his recent perceived embrace of it.
In Nigeria, the story features even more factors. With the alarming inflation levels and the Naira’s persistent underperformance and devaluations, bitcoin’s stark contrast continues to present a haven for those on the ground.
Further, USDT has emerged as another alternative to the Naira over the last year, with stablecoins now accounting for 43% of the crypto transaction volume in Sub-Saharan Africa, according to Chainalysis. As the Naira continues to fall to the US dollar and US dollar liquidity tightens in the country, many seek out USDT as it is simply the easiest way to access the scarce USD for trade, short-term savings, and international payments.
Bitcoin Outlook In Nigeria
As the Naira continues to face further devaluations and slips against the US dollar, it has become almost second nature for those in Nigeria to seek out viable alternatives in the form of bitcoin and USDT.
With 2025 on the horizon, we can expect that this dynamic will persist as long as the challenges facing the Naira continue and more Nigerians flock to alternatives to reap the attendant benefits of having cheap access to USD via USDT and the ability to store wealth and make unencumbered global cheap instant payments via bitcoin.
Nevertheless, Q4 is not over yet, and there may well be some consolation for the Naira over the coming weeks in regaining its strength against the US dollar as the Government, especially the CBN, continues to proactively implement measures to ameliorate the present economic and currency challenges.
