Investors on Wednesday have priced the 1-year non-deliverable forwards (NDF) on Nigeria to N268.5 (N261.01 on Wednesday) to the dollar representing a 2.79 percent increase. This is in apparent reaction to the decision by JP Morgan to remove Nigeria from its government bond index.
NDF is a derivative product used to hedge against future exchange rate moves and is often used to reflect future price expectation. An NDF that shows the future price of the Naira against the dollar to be higher than it currently is suggest weakness.
According to data from Reuters, the naira is trading at a central bank pegged rate of 197 to the dollar. On the black market, the currency firmed to 221 compared with 223 previous day after the central bank sold $80 million to bureaux de change operators.
