Economy

Nigeria to Introduce 10-Year Naira Futures

Published

5 years ago

08/09/2019

By Dipo Olowookere

Discussions are ongoing with the Central Bank of Nigeria (CBN) for the introduction of between 5-year and 10-year Naira futures contract, Bloomberg is reporting.

In 2017, the apex bank began the sale of foreign-currency futures contracts on the FMDQ Securities Exchange Plc with a maximum duration of 13 months.

This was mainly to lessen pressure on the Naira by spreading Dollar purchases over a period time, enabling investors to hedge against fluctuations in the Naira, while also offering forwards that were introduced in 2011.

Quoting the CEO of FMDQ, Mr Bola Onadele, in an interview in Lagos, it was said that the introduction of the FX futures was being considered so as to ease pressure on the local currency and boost investor confidence as the price of the crude oil, especially the Brent, which Nigeria’s crude is categorized, has been trading below the budget benchmark of $60 per barrel lately.

The domestic currency has been under pressure recently as a result of unclear economic direction of the present administration of President Muhammadu Buhari, which has caused outflows of foreign exchange from the country as well as fears of a possible devaluation of the Naira.

According to Mr Onadele, market dealers and the FMDQ are “engaging the central bank to extend the curve of the FX futures because it will create stability for capital inflows into Nigeria,” adding that, “We wish for 5- to 10-year futures.”

If the longer futures are introduced, it would help cushion against foreign-exchange risks and attract longer-term funding to the nation.

“The best way to guard against exchange-rate volatility is to purchase futures contracts,” Mr Onadele said, stressing that, “Longer-tenor futures will help to drive capital into Nigeria. It also provides opportunities for Nigerians in diaspora to bring their money home.”

Continui9ng, the FMDQ chief said, “The availability of this FX futures product reduces, if not eliminates, the need to hoard FX and front-load on FX requirements.”

He expressed optimism that, “Foreign-portfolio investors tracking value will buy the futures, so will foreign direct investors and long-term borrowers in foreign currency.”

Nigeria operates a system of multiple exchange rates in a bid to control demand for Dollars. The system, criticized by the International Monetary Fund (IMF), has kept the official rate at about N305 per Dollar at the interbank segment, N358/$ at the Investors and Exporters (I&E) segment and N360 to a Dollar at the parallel market.

Economy

NASD Bourse Closes Mixed at Midweek as Paintcom Joins

Published

6 hours ago

16/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange recorded a mixed outcome on Wednesday, January 15 after it welcome a new entrant.

Paintcom Investment Nigeria Plc joined the OTC securities exchange yesterday with shares admitted at a unit price of N10.72 and a market capitalisation of N8.5 billion.

However, when trading activities closed for the session, the alternative stock exchange went down by 0.10 per cent, with the NASD Unlisted Security Index (NSI) depreciating by 3.03 points to 3,093.16 points from the 3,096.19 points recorded in the previous session.

But the value of the trading platform increased by 0.7 per cent or N7.54 billion to settle at N1.068 trillion compared with the preceding day’s N1.061 trillion.

The volume of securities traded in the session went down by 83.2 per cent to 666,494 units from the 3.97 million units recorded in the preceding session, while the value of shares traded during the session jumped by 98.2 per cent to N16.5 million from N8.3 million, with the number of deals going down by 20 per cent to 20 deals from 25 deals.

Industrial and General Insurance (IGI) Plc gained 3 Kobo to close at 30 Kobo per share versus 27 Kobo per share, Mixta Real Estate Plc increased by 23 Kobo to N2.58 per unit from N2.35 per unit, and Central Securities Clearing System (CSCS) Plc added N1.15 to settle at N23.20 per share, in contrast to Tuesday’s closing price of N22.15 per share.

Further, Afriland Properties Plc grew by 75 Kobo to N16.25 per unit from N15.50 per unit and Geo-Fluids Plc expanded by 13 Kobo to N4.79 per share from N4.66 per share.

On the flip side, 11 Plc fell by N27.74 to close at N253.10 per unit compared with the previous session’s N280.84 per unit and FrieslandCampina Wamco Nigeria Plc lost 55 Kobo to finish at N38.95 per share versus N39.50 per share.

FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 3.4 million units worth N134.9 million, followed by Geo-Fluids Plc with 8.9 million units valued at N43.0 million, and Afriland Properties Plc with 690,825 sold for N11.1 million.

IGI Plc closed the day as the most active stock by volume (year-to-date) with 23.5 million units sold for N5.3 million, trailed by Geo-Fluids Plc with 8.9 million units valued at N43.0 million, and FrieslandCampina Wamco Nigeria Plc with 3.4 million units worth N134.9 million.

Economy

Naira Crashes to N1,551/$1 at Official Market Amid Inflationary Pressures

Published

7 hours ago

16/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The Naira depreciated on the American currency in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, January 15 by 0.09 per cent or N1.45 to close at N1,551.10/$1 compared with the preceding day’s N1,549.65/$1.

It was the fourth straight session the local currency was losing value on the greenback in the official forex market as the deadline to end the access of Bureaux De Change (BDCs) to the official trading platform nears.

Also, Nigeria’s inflation neared a 29-year high as it rose for the fourth straight month to 34.80 per cent in December 2024 spurred by high festive activities.

On the British currency, which is the Pound Sterling, the domestic currency depreciated by N24.79 to wrap the session at N1,904.43/£1 versus the previous day’s N1,879.64/£1 and against the Euro, it weakened by N14.74 to sell for N1,600.79 per Euro versus N1,586.05/€1.

At the parallel market, the Nigerian Naira traded flat against the US Dollar yesterday at N1,650/$1, according to data obtained by Business Post.

In the cryptocurrency market, most of the tokens gained as the anticipation of Mr Donald Trump’s inauguration as US president is building bullish sentiment for the market, which was also encouraged by a highly anticipated CPI inflation data report in the US.

Litecoin (LTC) grew by 17.7 per cent to quote at $119.82, Ripple (XRP) expanded by 9.0 per cent to a six-year high of $3.10, Solana (SOL) appreciated by 7.2 per cent to trade at $202.81, Dogecoin (DOGE) rose by 5.3 per cent to finish at $0.3789, Ethereum (ETH) increased its value by 4.7 per cent to end at $3,376.28, and Cardano jumped by 3.3 per cent to settle at $1.06, Bitcoin (BTC) gained 2.8 per cent to close at $99,707.22, and Binance Coin (BNB) improved by 1.6 per cent to trade at $710.31, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.

Economy

Oil Market Rallies on US Crude Drop, Russian Sanctions

Published

8 hours ago

16/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The oil market rose more than 2 per cent on Wednesday, supported by a large draw in US crude stockpiles and potential supply disruptions caused by new US sanctions on Russia.

Brent crude futures appreciated by $2.11 or 2.64 per cent to $82.03 a barrel and the US West Texas Intermediate (WTI) crude grew by $2.54 or 3.28 per cent to close at $80.04 a barrel.

The US Energy Information Administration (EIA) reported an inventory dip of 2 million barrels for the second week of the year.

The change estimated by the EIA compared with a modest draw of around 1 million barrels for the previous week, which also saw sizable fuel inventories build that dragged oil prices lower.

For the week to January 10, the EIA estimated an inventory build of 5.9 million in gasoline, with production averaging 9.3 million barrels daily. This compared with a build of as much as 6.3 million barrels for the previous week when production averaged 8.9 million barrels daily. That build was the second sizable weekly one after 2024 ended with a build of 7.7 million barrels in gasoline inventories.

The latest round of US sanctions on Russian oil could disrupt Russian oil supply and distribution significantly, the International Energy Agency (IEA) said in its monthly oil market report.

The Paris-based agency said that the sanctions on Iran and Russia cover entities that handled more than a third of Russian and Iranian crude exports in 2024, adding that the market will be in surplus this year as supply growth led by countries outside the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ exceeds subdued expansion in world demand.

This aligns with an earlier projection by the EIA which assumes that OPEC+ would roll back its production cuts and that non-OPEC production would continue leaping forward.

Limiting the gains was fresh developments in the Middle East as Israel and Hamas agreed to a deal to halt fighting in Gaza and exchange Israeli hostages for Palestinian prisoners.

OPEC in its monthly oil report on Wednesday forecast stronger demand growth than the IEA of 1.45 million barrels per day this year and, in its first look at 2026, predicted a similar expansion of 1.43 million barrels per day next year.

OPEC expects global oil demand to rise by 1.43 million barrels per day in 2026, maintaining a similar growth rate to 2025.