Nigeria’s 5-year onshore Non deliverable Forwards (NDF) has posted its biggest move, a 27 percent depreciation (N156) to N569.69.
Along the curve the 1-year is down by 5 percent and the shorter maturities by about 1 percent.
The move down reflects traders’ expectations that the Central Bank of Nigeria (CBN), will struggle to maintain the exchange rate at current levels if oil prices remain at current historical low levels, as such, this change in prices is more reflective of current market sentiments.
The CBN devalued the naira in March to N360 from N306 and kept its benchmark rate at 13.5 percent to avoid putting further pressure on the naira. However that has not been enough as the black market rate has weakened to N440 per dollar.
Oil accounts for about 50 percent to government revenue and 90 percent of exports.