Header Ads

CBN Agrees To Settle February NDF at N412/$1, See Current Parallel Market Rate

The Central Bank of Nigeria has revised its one-year Non-Deliverable Forwards (NDF) for which it intends to settle foreign exchange futures contracts for the period ending February 2021 to N452.82 up from N440.86.
The NDF is a closely watched indicator of the direction of the exchange rate in the future and is often referenced against the spot rate of the exchange rate between the naira and the dollar.

 It was gathered that foreign currency analysts are pointing at the latest NDF contracts as an indication that the closing rate of the exchange rate at the I&E window might be devalued this month.

 In the contract terminating February 24th, 2021 the central bank priced the dollar at N412.14 which, compared to the N395/$1 traded at the Investors and Exporters (I&E) window, represents a 4% devaluation.

 Analysts who spoke to Nairametrics are of the opinion that the fact that the CBN is willing to settle NDF contracts due at the end of the month for N412.14 suggest the current CBN official exchange rate of N379/$1 could also be devalued soon, while the exchange rate at the I&E window could also weaken to N415/$1.

 The exchange rate between the dollar and naira at the end of the year 2020 was N410.25, a signal that the central bank was open to a weakened currency in 2021. So far, it has resisted a weakening. 

 The exchange rate between the naira and dollar closed at N395/$1 on Tuesday despite recording an intraday high of N416.95 according to data from the FMDQ. At the parallel market, the exchange rate closed at N480/$1. 

Click the link below to see the current rate. Kindly share;

The central bank has resisted the need to devalue the currency closer to the parallel market, citing the latter as a relatively smaller market that cannot be used to determine the true value of the naira relative to the dollar. 

Instead, it has introduced several foreign exchange policies aimed at curtailing excess demand for forex and improving liquidity.

 For example, foreign remittances are now required to be paid in the currency in which they were remitted.

 Exporters are also mandated to inflow their proceeds to the I&E window or get kicked out of the banking sector. 

None of these moves are yet to close the disparity between the exchange rate and the black market and the official NAFEX market. 

 How the NDF works – The CBN enters into contracts with foreign investors who inflow foreign exchange into the country to hedge against devaluation risks. 

Using the example of a one-year NDF, a foreign investor brings in $1 million dollars into Nigeria and hopes to repatriate it one year from now. 

 He now enters into an NDF contract that allows him to convert the naira into dollar at an exchange rate of N452.82 when the time arises. 

If the exchange rate devalues beyond N452.82 to, say N460/$1, the CBN pays the foreign investor the difference of N7.18 multiplied by the $1 million. 

This protects the foreign investor against any future risk more than the N452.82 that he would have planned for.

No comments

Thank you for reaching out to us. We are happy to receive your opinion and request. If you need advert or sponsored post, We’re excited you’re considering advertising or sponsoring a post on our blog. Your support is what keeps us going. With the current trend, it’s very obvious content marketing is the way to go. Banner advertising and trying to get customers through Google Adwords may get you customers but it has been proven beyond doubt that Content Marketing has more lasting benefits.
We offer majorly two types of advertising:
1. Sponsored Posts: If you are really interested in publishing a sponsored post or a press release, video content, advertorial or any other kind of sponsored post, then you are at the right place.
Generally, a sponsored post can be any of the following:
Press release
Video content
This kind of post is usually written to promote you or your business. However, we do prefer posts that naturally flow with the site’s general content. This means we can also promote artists, songs, cosmetic products and things that you love of all products or services.
Every sponsored article will remain live on the site as long as this website exists. The duration is indefinite! Again, we will share your post on our social media channels and our email subscribers too will get to read your article. You’re exposing your article to our: Twitter followers, Facebook fans and other social networks.

We will also try as much as possible to optimize your post for search engines as well.

Submission of Materials : Sponsored post should be well written in English language and all materials must be delivered via electronic medium. All sponsored posts must be delivered via electronic version, either on disk or e-mail on Microsoft Word unless otherwise noted.
The price largely depends on if you’re writing the content or we’re to do that. But if your are writing the content, it is $60 per article.

2. Banner Advertising: We also offer banner advertising in various sizes and of course, our prices are flexible. you may choose to for the weekly rate or simply buy your desired number of impressions.

Technical Details And Pricing
Banner Size 300 X 250 pixels : Appears on the home page and below all pages on the site.
Banner Size 728 X 90 pixels: Appears on the top right Corner of the homepage and all pages on the site.
Large rectangle Banner Size (336x280) : Appears on the home page and below all pages on the site.
Small square (200x200) : Appears on the right side of the home page and all pages on the site.
Half page (300x600) : Appears on the right side of the home page and all pages on the site.
Portrait (300x1050) : Appears on the right side of the home page and all pages on the site.
Billboard (970x250) : Appears on the home page.

Submission of Materials : Banner ads can be in jpeg, jpg and gif format. All materials must be deliverd via electronic medium. All ads must be delivered via electronic version, either on disk or e-mail in the ordered pixel dimensions unless otherwise noted.
For advertising offers, send an email with your name,company, website, country and advert or sponsored post you want to appear on our website to omodjk(at)gmail(dot)com

Normally, we should respond within 48 hours.