Nigeria's naira hits new lows vs dollar on spot, forwards markets

The Nigerian naira fell sharply on the spot and derivatives markets on Tuesday after the market regulator revised its benchmark methodology for calculating closing rates for the currency.

The naira has lost around 40% since the start of the year.

An official at market regulator FMDQ OTC Securities Exchange said its methodology was revised on Friday to include more data in its calculation and that the levels on its computation had changed.

Africa's biggest economy has suffered from severe dollar shortages in its foreign exchange market which has seen its official exchange rate drift towards the unofficial parallel market level, where the currency is traded freely.

The central bank also owes around $5 billion in matured forward deals, worsening a shortage of foreign currency in the West African nation and putting the naira under significant pressure.

The naira fell to as low as 1,490 to the dollar on the official spot market in late trades on Tuesday, after it hit record lows on the forwards market, which quoted the currency at 1,427.50 to the dollar in one month's time.

On Monday, following its new methodology, FMDQ Exchange data showed the naira had fallen to 1,421 per dollar on Friday on the thinly traded official market, below levels seen on the unofficial market.

The central bank has warned lenders about under reporting transactions on the financial market, leading to misinformation, attempts to create price distortions and market manipulation, and said such activity would be sanctioned.

Other maturities on the forwards market on Tuesday also fell, with traders quoting the currency as low as 1,626.18 naira per dollar in a year's time.

Reuters