Naira |

Traders Aren’t Yet Calling an End to Nigeria’s Naira Problem

LAGOS (Capital Markets in Africa) – Nigerian officials are increasingly confident the naira’s troubles are over for good. Some investors disagree. Portfolio inflows have risen in the past three months with crude prices increasing above $60 a barrel and money managers taking heart from a new foreign-exchange trading window, in which the naira has converged with the black-market rate. That prompted central bank Governor Godwin Emefiele and Patience Oniha, the head of the nation’s Debt Management Office, to tell…

Unintended Result of Nigerian Dollar Hunt Is Naira Shortage

Posted on by The Editorial Team

LAGOS (Capital Markets in Africa) – First Nigerian businesses were hit by a dollar shortage. Now there aren’t enough naira. A central bank requirement that companies back forward dollar purchases with naira is drying up supplies, helping to underpin a 2.1 percent gain since the local currency fell to a record low against the greenback on Aug. 9. At the same time, an increase in government borrowing is spurring banks to invest in the safety of sovereign debt rather…

Nigerian Naira Is Overvalued by 20% vs USD Says Bank of America

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LAGOS (Capital Markets in Africa) – “A 20% depreciation in the NAFEX/NGN spot exchange rate is still needed to reach fair value, despite last year’s partial devaluation and the recent moves in key FX windows,” Bank of America analysts Yusuf Rukayat and Gabriele Foa say in a note to clients. They recommend avoiding naira debt, even with 1-year T-bills yielding 22% and FX-hedged trades yielding 12%. “While NGN carry is similar to EGP, we find…

Weak Naira, Inflation Leave Nigeria Little Room to Cut Rates

Posted on by The Editorial Team

LAGOS (Capital Markets in Africa) – A weak naira and stubborn inflation may prevent Nigeria’s central bank from following South Africa and Ghana in cutting interest rates. Only two of 19 economists in a Bloomberg survey predicted the Monetary Policy Committee will reduce borrowing costs on Tuesday. The rest said the key rate will stay at a record high of 14 percent, where it’s been for a year. Governor Godwin Emefiele, who is scheduled to announce the…

Nigeria’s Half-Measures on Currency Are Only Half-Working

Posted on by The Editorial Team

LAGOS (Capital Markets in Africa) – A year after Nigeria scrapped a currency peg that sent foreign investors fleeing, it’s still battling to entice them back. But trying to placate investors by introducing multiple exchange rates isn’t going to work, bond funds and Wall Street lenders including Citigroup Inc. say. To end the dollar shortage that has hamstrung West Africa’s biggest economy and oil producer, President Muhammadu Buhari and central bank Governor Godwin Emefiele will have to weaken the naira’s official rate again,…

Parallel Market Emerges in Nigeria’s Currency-Trading World

Posted on by The Editorial Team

LAGOS (Capital Markets in Africa) – A kind of parallel universe is taking shape in Nigeria’s foreign-exchange market. The African country’s traditional forwards market is facing competition from an upstart based on the new exchange-rate window policy makers opened six weeks ago. Bond investors and speculators are switching away from non-deliverable forwards that are linked to the main interbank exchange rate, which is tightly controlled by the central bank, and embracing the more liberal pricing…

Nigerian Naira Forward Contracts Jump as Nigeria Eases Interbank Rules

Posted on by The Editorial Team

LAGOS (Capital Markets in Africa) – Naira six-month non-deliverable forward contracts rise 1.3%, most on closing basis since April 27, to 360 per dollar. 1-month contracts +0.8% to 331/USD, 3-month contracts +1% to 342.

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