Naira depreciates at 5 years Fowards Market,now N570 to $1

[Melvin]

Nigeria's 5years 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 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 FX market.Foward currency contracts are used by traders,investors to lock in a currency's exchange on a date agreed on.Non-Deliverable forwards (NDF) 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.