In a stunning reversal of fortune, Nigeria's naira has plummeted to claim the unenviable title of the world's worst-performing currency in the past month, according to a recent Bloomberg report. This development heaps pressure on the Central Bank of Nigeria (CBN) to consider further interest rate hikes.

With the naira depreciating to 1,466.31 against the dollar, hitting its weakest level since March 20, the report underscores the critical need for action. The scarcity of the US dollar locally exacerbates the situation, with Thursday's supply dwindling to a mere $84 million, half of the previous day's allocation.

Earlier accolades lauding the naira's performance by CBN governor, Yemi Cardoso, have now been overshadowed by these recent challenges. Despite Cardoso attributing the naira's previous success to market reforms and positive sentiments from international investors, the current downturn raises concerns about sustained stability.

Razia Khan, Chief Economist for Africa and the Middle East at Standard Chartered, anticipates a further strain on the market as $1.3 billion in naira futures mature by month-end, potentially fueling increased demand for dollars. This looming scenario underscores the volatile nature of the Naira.

The CBN faces mounting pressure to take decisive action following its upcoming policy meeting on May 21, with possibility for additional rate hikes echoing previous increases in February and March totaling 600 basis points. These hikes had initially bolstered the naira's value, offering respite to investors seeking higher returns.

The naira's vulnerability extends beyond official markets, with informal exchanges also witnessing a decline to 1,468 naira against the dollar on Friday.

Abubakar Muhammed, CEO of Forward Marketing Bureau de Change Ltd., attributes this trend to heightened demand from individuals and small businesses, indicating broader economic uncertainties.

Notably, Nigeria isn't alone in grappling with currency woes. Zambia's kwacha hit a record low, while Ghana's cedi weakened to its lowest level since 2022, both countries navigating complex debt restructuring processes. Ayodele Salami, Chief Investment Officer for UK-based Emerging Markets Investment Management Ltd., highlights the impact of debt negotiations on investor confidence across Africa.

Amidst these challenges, the naira and other African currencies face mounting pressure from domestic demand for dollars, particularly for raw material imports, including oil. These multifaceted factors underscore the urgent need for strategic interventions to stabilize Nigeria's currency and restore confidence in its economic outlook.