Photographer: Tom Saater/Bloomberg

Nigeria Stocks Take Knock-Out Punch From Forex Window Move

Nigeria missed its best chance in 13 months to overtake Egypt in stock-market capitalization as an expansion of the new foreign-exchange window spurred a plunge in the naira.

The Lagos market lost $6.5 billion on Tuesday, or 16 percent of its market value, after banks started quoting the naira using a trading window for foreign investors rather than the interbank rate. That wiped out the gains made in the past two months during a rally spurred by investor optimism on the so-called Nafex system.

Read More: Nigeria Moves Closer to Single Naira Rate as Banks Use Nafex

Unlike Nigeria, whose measures have fallen short of a full currency float, Egypt is gaining from its decision in November to let the pound’s value be determined by the market. While that initially shaved off 42 percent of the combined value of Cairo stocks, it soon brought in foreign investors, boosting the capitalization by $12 billion.

Nigeria’s main equity index rose for a third day to a one-week high Thursday.

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