Skip to content
Subscriber Only

Naira Forwards, Volatility Surge as Nigeria Removes Spread Limit

  • Three-month forwards head for record high on closing basis
  • Foreign-exchange liquidity still shallow, INTL FCStone says
Updated on

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.