The new foreign exchange policy, yesterday, received a $20 million foreign investment boost as the Central Bank of Nigeria, CBN, and Citibank Nigeria Limited executed the first Naira-Settled Over the Counter (OTC) Foreign Exchange Futures.
The $20 million was a foreign investment inflow into the country.
“What the bank did was to leverage on the opportunity provided by the Naira-Settled OTC Futures to facilitate inflow of $20 million into the country. It is boost for dollar supply into the market,” the source said.
The Naira Settled OTC Futures is one of the critical features of the flexible exchange rate regime announced by the CBN on Tuesday June 14th, 2016. It basically means future purchase of foreign exchange at an agreed exchange rate, with any difference between agreed exchange rate and the prevailing exchange rate on the agreed date, settled in naira. It was designed as a means of managing foreign exchange risks and reduces demand pressure for immediate purchase of foreign exchange.