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The Nigeria Sovereign Investment Authority (NSIA) the managers of its Sovereign Wealth Fund (SWF) booked an exchange loss of N477.67 billion on realized swap positions as at March 2025, compared to gains of N426 billion as at December 2024.
This led to the balance on its other assets and receivables falling by 91% to N24.7 billion from N285.58 billion in December 2024.
An FX swap is a financial transaction in which two counterparties exchange specific amounts of two different currencies at the outset and repay at a future date according to a predetermined rule reflecting both interest payments and amortization of the principal.
The balance of the NSIA swap position was N635 billion in Q1, 2025, held as collateralised securities and shows the fair value of the financial assets arising from the currency swap transactions with the Central Bank of Nigeria (CBN) and the underlying asset (OMO Bills).
The notional amount indicates that the volume of transactions as at 31st March 2025 stood at $410 million.
Currency swap with the CBN avails USD liquidity to the apex bank while providing an avenue to boost earnings for the NSIA.
However, the trade might have backfired as unfavorable changes in exchange rates can lead to significant losses when the contract is marked to market or settled.
The Nigeria Sovereign Wealth Fund (SWF) massive exchange loss is anther sign that all is not well with the direction of the NSIA.
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