The Central Bank of Nigeria is reported to have cleared some of its forwards obligations according to information reaching Nairametrics on Friday.
The Central Bank on June 20th when the market interbank market for floating Nigerian currency market opened, pushed about $3.489billion in forward sales with $697 million due for payment in one month, $1.22 billion in two months and another $1.57 billion in three months.
It appears the $697 million due in one month has now been cleared by the Central Bank of Nigeria. Forwards are contracts signed.
The head of Corporate Communications of the CBN , Mr. Isaac Okorafor, confirmed the transaction to Thisday. “We delivered on that – the forward contracts. Like we have always said, we would keep to our obligations. We have lived up to our promise. We expect that the market liquidity would continue to improve and we are very confident that the FX market will get better with time.”
Customers who bought forward contracts from the CBN at about N282 when the deal was consummated are set to gain a tidy N28 to the dollar considering that the Naira closed at N310 at the interbank market on Thursday.
A currency forward is basically a binding contract for the sale of forex between two parties, a buyer and a seller. The contract mandates the seller to provide forex to the buyer at a future date at a predetermined exchange rate.