Naira forwards rose to record highs and volatility surged after the Central Bank of Nigeria removed a limit on bid-offer spreads in the foreign-exchange market, raising expectations the currency is set to extend declines as it trades more freely.
Three-month non-deliverable forward contracts jumped 4.1 percent to a record 329 per dollar by 4:41 p.m. in Lagos, while contracts maturing in a year rose 3.3 percent to 363, also the highest level on a closing basis. One-week historical volatility increased to 27 percent, compared to an average of 8.6 percent over the past year, according to data compiled by Bloomberg.
While the naira weakened 3.5 percent to a record 294.5 versus the dollar in the spot market, having swung between 280.22 and 294.84, little trading took place, according to David Willacy, a currency trader at INTL FCStone Ltd.
On Friday, the central bank ended a rule capping the difference, or spread, between bids and offers in the foreign-exchange interbank market at 50 kobo, according to Kunle Ezun, an analyst at Ecobank Transnational Inc.
“That’s why you are seeing that volatility,” Ezun said by phone from Lagos. “The spread used to make prices move within a defined range, which is not good. The expectation is that central bank will allow the market to trade freely by removing the spread and letting liquidity determine the rate.”
The naira depreciated 29 percent against the dollar last month after the Abuja-based regulator ended a 16-month peg of 197-199 per dollar. That and the capital controls used to defend it led bond and stock investors to flee the country and exacerbated an economic crash caused by the fall in oil prices from mid-2014. The economy contracted in the first quarter and is likely to shrink over the whole of 2016, the International Monetary Fund said on July 8.
Black Market
Few investors have returned to Nigeria’s markets since the devaluation and many think the exchange rate needs to weaken further. Importers of items such as glass, textiles and rice are still banned from using the interbank market to buy hard currency and are forced on to the black market, where the naira trades at about 365 per dollar.
Central bank Governor Godwin Emefiele and Deputy Governor Sarah Alade met investors in the U.S. and London last week to entice them to buy naira assets. Emefiele dismissed suggestions that there was too little foreign-exchange liquidity and said the black market was too small for them to use as a gauge of the naira’s true value, according to two people with attended the private talks and asked not to be identified.
“The market looks to be overvalued as investors are still unwilling to sell dollars into Nigeria,” Willacy at INTL FCStone said by phone from London. “We can imply this by the low trading volumes on the interbank market.”
Tuesday, July 19, 2016
Monday, July 18, 2016
Video - Nigeria military denies reports of looming famine in North-east
Nigeria's military is denying reports of an unfolding humanitarian crisis in Northeastern Nigeria. Aid agency Doctors Without Borders (MSF)has warned of a deteriorating situation that some observers believe may require intervention from the United Nations.
Video - Top Five Nigeria National Team Goalscorers
As Nigeria get ready to pick a new national team coach, here's a look at some of the men who have made the Super Eagles one of the best football teams on the continent in the past. This week on the Matchpoint Top Five segment, we're counting down Nigeria's Top Five Goalscorers for the National team.
Pokemon Go craze hits Nigeria
The new smartphone game “Pokemon Go” by Nintendo, which has had tongues wagging all over the world has hit Nigeria’s capital, Lagos by storm.
The new game which is not officially available in Africa but is said to be only available in very few countries like United States, Australia, Japan and New Zealand, has found its way to the West African country.
It is unclear at this stage how users where able to download the app, however, they’ve succesfully bypassed the ‘legal’ way of getting the game and are taking full advantage.
People are going crazy over Pokémon Go, which allows players to join one of three global teams, search for Pokémon monsters using real world elements and battle for territory using GPS.
Nintendo’s shares hit a six year high after the launch of the game. The Japanese game company’s stock climbed 86 per cent since last Thursday on the back of game’s popularity.
The new game which is not officially available in Africa but is said to be only available in very few countries like United States, Australia, Japan and New Zealand, has found its way to the West African country.
It is unclear at this stage how users where able to download the app, however, they’ve succesfully bypassed the ‘legal’ way of getting the game and are taking full advantage.
People are going crazy over Pokémon Go, which allows players to join one of three global teams, search for Pokémon monsters using real world elements and battle for territory using GPS.
Nintendo’s shares hit a six year high after the launch of the game. The Japanese game company’s stock climbed 86 per cent since last Thursday on the back of game’s popularity.
Football Legend Pele set to visit Nigeria in August
Born Edson Arantes do Nascimento, the three-time World Cup winner will headline a youth football tournament that will take place at the Astro-Turf in Ikoyi as well as a leadership meeting with Corporate Nigeria.
Famous for scoring 1,281 goals during his career, Pele won the first of his three World Cups as a 17-year-old at Sweden ’58 before adding two more titles at Chile ’62 and Mexico ’70.
The WJS/YEDA Legend Edition 2016 is a 2-day event (11th -12th August, 2016) focused on youth development and empowerment through a once-in-a-lifetime inspiring experience with Pele.
The event will involve football loving teenagers and parents, key figures from various state governments, the corporate sector and the Nigeria Football Federation. The event will include a sports clinic (Legend tournament), a Gala Night with Pele and other African football legends.
It will also include an auction of Pele memorabilia at the Gala night with proceeds from the auction expected to be donated to an eligible local youth football academy.
Pele has received an honorary knighthood from Britain's Queen Elizabeth II and was named "Athlete of the Century” and "Player of the Century” by the International Olympic Committee and Fifa respectively, amongst many other accolades.
This will be Pele’s second visit to Nigeria; the first in 1967, was occasioned by a 2-day cease fire during the Nigerian Civil War which allowed the warring sides to watch the Pele & Santos FC team play an exhibition match in Lagos.
Fans can register for the visit via the official website.
Subscribe to:
Posts (Atom)