Nigeria Plans to Extend FX Futures Curve to 10 years

Newscast - Africa

English - September 12, 2019 10:32 - 3 minutes - 3.11 MB
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Conversations are ongoing between the FMDQ and the Central Bank OF Nigeria (CBN) about extending the FX futures curve to 10 years, as the country constantly explores means to manage its foreign exchange risk. In recent times , pressure has been mounting on the country’s reserves as oil prices have been oscillating around the government’s US$60/bbl benchmark, causing an outflow of foreign investment from the capital market. The external reserves peaked at US$45.12 billion in May 2019 but have since declined by c.4.37% to US$43.10 billion as at 6 September. The continued decline in the reserves could limit the ability of the Central Bank to keep up with its interventionist policy in the foreign exchange market, underpinning the rationale behind exploring new ways of managing foreign exchange risk.

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