Nigeria’s central bank has introduced longer-term contracts on the naira in a move to attract more foreign inflows, shore up its dwindling dollar reserves and prevent the currency from weakening.
The bank has kept the naira stable even as oil prices drop and foreign investors book profits on local bonds in response to falling yields and operates a multiple exchange rate regime to manage pressure on the currency.
The central bank offered naira-futures contracts for five-year settlement for the first time, priced at 379.81 naira to the U.S. dollar. The longest tenor prior to this move was a 13-month contract, which the central bank has offered for more than a year.
The naira has come under pressure this year as importers demand dollars to feed Nigeria’s consumers and as market sentiment worsen by fears that the coronavirus outbreak could hit Chinese demand, one of Nigeria’s major trading partners.