Nigerian Naira Inches Near Forward Rate
Nigerian naira inches near the non-deliverable value of N715 per United States dollar Friday after it was sold at N702.19 at the investors’ and exporters’ foreign exchange window yesterday.
This suggests an accurate market value of the local currency after a decision to float the naira to achieve a market clearing rate. Amidst all the moves to reform fx market, some analysts said devaluation would aggravate the misery index in the year.
“Price will worsen, companies could rationalize workforce or raise capital to survive increased production costs, and rising overheads”, LSintelligence Associates told MarketForces Africa.
As the market awaits inflows from foreign investors, the Nigerian non-deliverable currency forwards hit a new record low on Friday, Refinitiv data showed, days after the central bank lifted restrictions.
Non-deliverable currency forwards, a derivative product used to hedge against future exchange rate moves, indicated markets expected the naira’s exchange rate at 715 to the dollar in one month’s time, Reuters said in a report.
The naira swung widely in trading on the spot market for a third day on Friday. It hit a low of 765 naira and recovered to 463.75 naira. It was quoted at 661 naira.
The central bank on Wednesday said all currency trading would now take place at what is known as its Investors and Exporters (I&E) window and re-introduced the “willing buyer, willing seller” model in a move that unified its multiple exchange rates.
