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Nigerian Stock Exchange to launch trading in Forex futures?

“It would be awesome if we had a naira-dollar contract that we could trade on the exchange…Futures and options are asset classes that we think would be very beneficial to foreign investors.” – CEO of the Nigerian Stock Exchange Oscar Onyema told Bloomberg News.

The Nigerian Stock Exchange CEO has stated to Bloomberg that the African exchange is looking to start trading naira futures sometime in the near future. The rationale being is that it will help investors hedge against movements in the local currency. Moreover, it is also a way to diversify the exchange offering into FX as Nigeria’s markets continue to develop as one of the strongest and most capable on the African continent. As of now the exchange trades in Equities, Bonds, and ETFs.

The bourse might offer futures by the end of 2017, Onyema told Bloomberg. Also according to the article reported by Maria Levitov from Bloomberg, traders and bankers alike have called for a loosening of capital controls enforced by central bank Governor Godwin Emefiele to protect the naira.

Nigeria, as one of Africa’s biggest oil producers has put on protective measures on its currency in the face of a slump in crude oil prices in the past year, which has effected other oil rich countries such as Russia and Canada as well. The naira has weakened 18% against the dollar in that period (see chart below).

 

U.S. Dollar vs. Nigerian Naira. Courtesy: BarChart.com

 

To note, Nigeria’s benchmark all shares stocks index added 0.4 percent on Monday, its first gain in five days. So far the index is still down 3.7 percent year-to-date. (see chart below).

 

MARKET INDICIES - ALL SHARE INDEX. Courtesy: The Nigerian Stock Exchange

 

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