Naira Falls By 2.79% At Forward Market

Naira notes

The foreign exchange market and bond yields, yesterday, reacted to the decision of JP Morgan to remove Nigeria from its Government Bond Index for Emerging Markets (GBI-EM) with the 1-year non-deliverable forwards (NDF) on naira rising by 2.79 per cent to N268.50.

Bond yields also skyrocketed from about 15 per cent to as high as 17 per cent while interbank lending rates dropped.

A derivative product used to hedge against future exchange rate moves, Currency Forwards, reflects the expectations of a weaker naira; one-year NDFs priced the naira at N268.5 per dollar while it traded at N261.01 shortly after the index announcement.

JP Morgan, late on Tuesday, said that it will remove Nigeria from its GBI-EM by the end of October after warning the government of Africa’s biggest economy that currency controls were making transactions too complicated.

Source : Leadership

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