Since NGE does not hedge its currency exposure, a depreciating naira would mean returns are lowered when converted back into U.S. dollar terms.
SEE MORE: Nigeria ETF Tumbles
“Nigeria’s economy has weakened more than we expected owing to a marked contraction in oil production, a restrictive foreign exchange policy and delayed fiscal stimulus,” Bloomberg reported, citing an emailed statement from S&P.
Some oil market participants believe the recent price recovery was not fueled by fundamental factors but more of a result to short-covering and speculation over potential production freezes among Organization of Petroleum Exporting Countries and other major producers.
OPEC has kept up production to pressure high-cost rivals, such as the developing U.S. shale oil producers. The International Energy Agency expects it will take several years before OPEC can effectively price out high-cost producers.
For more information on Nigeria, visit our Nigeria category.
Global X Nigeria Index ETF
