Hedging Foreign Exchange Risk in NGN - Nigerian Naira
The Foreign Exchange Risk in Nigerian Naira (NGN)
When conducting transactions with Nigeria, you may need to send or receive payments in Nigerian Naira. You are then naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in NGN and the time you collect the NGN, or conversely between the time your supplier issues their invoice in NGN and you settle this invoice in NGN, the EUR/NGN exchange rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/NGN exchange rate movement (assuming your accounting currency is EUR) over a determined period that you can implement hedges on the EUR/NGN. By locking in the EUR/NGN rate in advance, you gain better visibility on your future cash flows in Nigerian Naira (NGN) and secure your EUR/NGN budget rate.
Hedging Foreign Exchange Risk on Nigerian Naira (NGN) with Mondial Change
Mondial Change allows you to hedge your foreign exchange risk on the Nigerian Naira (NGN). The foreign exchange risk hedging on the Nigerian Naira can be done through fixed forward contracts or flexible forward contracts. You can schedule a meeting with our trading desk. An expert market advisor will assist you in setting up your foreign exchange hedges on the Nigerian Naira (NGN).
Mondial Change Answers All Your Questions on Foreign Exchange Risk Hedging for Your Operations in Nigerian Naira (NGN)
Are there minimum or maximum amounts for setting up hedges in Nigerian Naira (NGN)?
The maximum amount of hedges in Nigerian Naira (NGN) you can validate primarily depends on the size of the forward exchange line granted to you. The granted line conditions depend on the review of your financial statements. Regarding minimum sizes, we generally do not take hedges for amounts below 10,000 EUR (or equivalent in other currencies).
What is the maximum possible maturity for hedges in Nigerian Naira (NGN)?
Generally, we do not offer hedges in Nigerian Naira (NGN) for maturities exceeding 24 months, but this can be considered on a case-by-case basis. Please contact our trading desk for a personalized assessment of your needs.
What are the setup fees for hedging against foreign exchange risk in Nigerian Naira (NGN)?
All fees related to setting up hedges in Nigerian Naira (NGN) are included in the exchange rate communicated to you before the validation of your transaction. The hedging is done by phone with a trading desk operator. No fees are applied to the use of your hedges.
Is a security deposit required to take a hedge in Nigerian Naira (NGN)?
Again, this depends on the conditions of your forward exchange line. Thanks to its network of partners, Mondial Change generally manages to obtain forward exchange lines without an initial security deposit. Depending on your line conditions, margin calls may be triggered on your Nigerian Naira (NGN) hedging contracts if the EUR/NGN rate (or any other pair on which you have validated a hedge) deteriorates beyond the variation margin or beyond your OTM. In this case, you must deposit funds as collateral to keep your Nigerian Naira (NGN) contracts open. Based on the review of your financial statements, lines without margin calls may sometimes be granted.
Are there minimum amounts for early drawdowns on flexible forward contracts in Nigerian Naira (NGN)?
There is no minimum amount for drawdowns on your flexible forward contracts in Nigerian Naira (NGN). You can draw down autonomously on the online platform as many times as you wish between the time of contract initiation and the maturity date of your forward contract in Nigerian Naira (NGN).
What happens at the maturity of my forward contract in Nigerian Naira (NGN) if I have not used the entirety of my contract?
In this case, there are two possibilities. You can sell the balance of your contract by paying the potential exchange loss if the exchange rate at the time of resale is less favorable than your contract rate. Alternatively, you can request Mondial Change to extend your Nigerian Naira (NGN) contract by a few months to give you time to use it. However, Mondial Change and its partners reserve the right not to accept the postponement of the contract's maturity date.
What is the current interest rate on the Nigerian Naira (NGN)?
The current interest rate on the Nigerian Naira (NGN) is "Currency Rate".
Are there carry points or discount points on forward contracts in Nigerian Naira (NGN)?
It all depends on whether you are a buyer or seller of Nigerian Naira (NGN) and against which currency you are trading the Nigerian Naira. For example, against the euro: If you are a buyer of Nigerian Naira (NGN) against the EUR, there are report points because the interest rate of the Nigerian Naira (NGN) is supérieur compared to that of the EUR. Conversely, if you are a seller of Nigerian Naira (NGN) against the EUR, there are déport points.