A Potteresque Alternative Emerges in Nigeria's Currency Markets
A Potteresque Alternative Emerges in Nigeria's Currency Markets
There are no wizards or muggles in the currency-forwards markets. Yet in Nigeria, a parallel universe is taking shape. The African country’s traditional currency-forwards market is facing competition from an upstart system based on the new exchange-rate window policy makers opened six weeks ago. Bond investors and speculators are switching away from non-deliverable forwards that are based on the main interbank exchange rate, which is tightly controlled by the central bank, and embracing the more liberal pricing mechanism. As Nigeria takes tentative steps toward currency liberalization amid economic turmoil caused by lower oil prices, the emergence of a separate NDF market underlines investors’
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