- 8th May 2020
- Posted by: Hakeem
- Category: FOREX LATEST NEWS DAILY, FOREX MARKET ANALYSIS, FUNDAMENTAL ANALYSIS, TECHNICAL ANALYSIS
Nigeria’s 5 years onshore Non-Deliverable forward contract posted its biggest drop by plunging 27% from N413.36 to close at N569.69 a price differential of N156. The 1-year Non-Deliverable forward contract was down 5% from N394.29 to close at N421.22 a price differential of N26.93.
One month NDF is now N395/$1 suggesting an imminent devaluation in the I&E window which could also impact the current official exchange rate of N360/$1 as well as the BDC rate which was devalued to N370/$1 some weeks back.
A forward market is an OTC market platform that fixes the price of a financial asset for future delivery. Forward markets are used for trading a range of instruments, especially in the foreign exchange market. Forward currency contracts are used by traders, investors to lock in a currency’s exchange on a date agreed on.
Non-Deliverable forwards allow hedging of currencies where fiscal regulators ban foreign access to local currency or the parties want to remunerate for risk without the physical exchange of cash.