Naira forward up 2.79 per cent after JP Morgan bond moves

The 1-year non-deliverable forwards (NDF) on Nigeria’s naira rose 2.79 percent to 268.50 on Wednesday, a day after a surprise move by JP Morgan to eject the African nation from its government bond index, Thomson Reuters data showed.

Currency forwards, a derivative product used to hedge against future exchange rate moves, reflect expectations of a weaker naira: One-year NDFs price the naira at 268.5 per dollar, while it traded at 261.01 shortly after the index announcement.

JP Morgan late on Tuesday said it will remove Nigeria from its Government Bond Index (GBI-EM) by the end of October, after warning the government of Africa’s biggest economy that currency controls were making transactions too complicated.

The naira is trading at a central bank pegged rate of 197 to the dollar. On the black market, the currency firmed to 221 compared with 223 previous day after the central bank sold $80 million to bureaux de change operators, said Aminu Gwadabe, president of Nigeria’s bureaux de change association.