June currency review

The Nigerian naira was the world's weakest currency in June (see first table below), continuing its rollercoaster ride since being floated in February. Remarkably, in the five months since flotation, the naira has been the world's weakest currency three times, but its strongest twice! Overall, it has fallen 41% against the euro since February, and 48% in the last 12 months (see last table below). This is clearly still a very volatile situation. Our strong recommendation to client teams with staff in or from Nigeria is to wait for things to normalise and keep applying ECA's suggested COLAs consistently over time. February's devaluation came after many years of the naira being overvalued (via a peg with the US dollar) and it is yet to find its feet.

The other big fallers in June were all Latin American. Investors were spooked by the ruling party's landslide presidential-election victory in Mexico, likely meaning increased state control of the economy. Worries about debt and a widening fiscal deficit reduced the value of the Colombian peso, while similar concerns about Brazil's public finances did for the real.

A big interest-rate hike and other monetary tightening measures did their job, as far as Zambia's central bank was concerned, making the kwacha the world's strongest currency in June (see next table). The impression that Russia is gaining the upper hand in its war with Ukraine may have strengthened the rouble. The Surinamese dollar, meanwhile, continued its steady advance, as development of its oil and gas industry made good progress. It has gained 21% overall against the euro in the last 12 months.

In other news, Zimbabwe's new currency, the so-called 'Zimbabwe Gold', has been given a new official code, ZWG, which came into effect on 25th June.

Finally, here is this month's selected currency movements table: