COVID-19; Naira Depriciates to N515 In Forward Market

The deadly coronavirus and the price war between Russia and Saudi Arabia over oil production cuts and poor demand from major markets like China, India has continued to have a negative impact on the Nigerian economy as Nigeria’s one-year currency forward posted its biggest drop in more than a decade.

Naija News recalled that the Central Bank of Nigeria adjusted the naira’s official rate on Friday as the derivative, which gives an indication of where the currency could trade in a year’s time, fell 11.3% against the dollar.

This also led to the  Naira, which depends on oil earnings for about 90% of foreign exchange earnings to depreciate further against emerged markets currencies like the Euro and  American dollar.

Naija News learnt that the non-deliverable forwards (NDF) market traded in London priced the naira at 515 to the dollar in a year’s time while naira futures of the same tenor were quoted at 385.

The nine-months currency forward also fell more than 11% while the shorter maturities were down at least five percentage each. The market differential between one-year naira forwards and futures widened to 130 naira on Monday, up from 30 naira in January, as investors raced to hedge risk.