Exchange rate increases to sell at N423/$1 during trading day at NAFEX despite oil prices crossing the $64 mark

Tuesday 16th February 2021: The exchange rate between the naira and the dollar depreciated slightly closing at N410/$1 at the NAFEX (I&E Window) where forex is traded officially. This is as the naira hit N423.15/$1 during trading day despite the global oil prices crossing the $64 mark.

Naira closed against the US Dollar at N410/$1, representing a 0.08% drop when compared to the N409.67/$1 recorded at the end of trade on Tuesday, February 16, 2021. This also represents a seventh straight trading day the Naira closed in the N400/$1 region.

At the parallel market where forex is traded unofficially, the naira depreciated closing at N478/$1 on Wednesday, February 17, representing a 1.06% drop when compared to the N473/$1 that it closed at the previous trading day

Also, Nigeria’s external reserves lost $124 million in 3 days as it fell to $35.633 billion as of February 15, 2021, from $35.757 billion as of February 12, 2021, according to data from CBN.

Trading at the official NAFEX window

The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Wednesday, closing at N410/$1. This represents a 33 kobo drop when compared with the N409.67/$1 that it closed on the previous trading day.

  • The opening indicative rate closed at N406.76 to a dollar on Wednesday. This represents a 22 kobo drop when compared to N406.54 to a dollar that was recorded the previous trading day on Tuesday, February 16, 2021.
  • An exchange rate of N423.15 to a dollar was the highest rate during intra-day trading before it closed at N410 to a dollar. It also sold for as low as N390/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window rose by 34% on Wednesday, February 17, 2021.
  • Forex turnover increased from $30.44 million on Tuesday, February 16, 2021, to $40.79 million on Wednesday, February 17, 2021.

Cryptocurrency Watch

The world’s largest cryptocurrency, Bitcoin, reached a new record high as it surges past the $51,000 mark for the first time, as the cryptocurrency gets acceptance among mainstream investors. Some analysts expect it to get as high as $70,000

  • This was just a day after bitcoin topped $50,000. It went as high as $51,140, before trading at $50,828.83 as of 8.20 am in London.
  • The new high extends a bull run for bitcoin that began last October.
  • The rally has coincided with increased institutional adoption. PayPal said last year it would allow customers to handle the token through its platform and Mastercard followed suit last week.
  • BNY Mellon, America’s oldest bank, said it too would handle bitcoin on behalf of clients, paving the way for more money to flow into the market.
  • A single bitcoin now trades for N20.84 million up 10.3% while Etherum trades for N700k up 5.1%.

Oil price crosses the $64 mark

Brent crude oil price hit $64.27, on Wednesday evening, the highest price since January last year as it goes past the $64 mark.

  • This is as the world’s largest oil exporter, Saudi Arabia, announced it is set to raise oil output in the coming months amid a recovery in prices, while OPEC+ is likely to roll over its output curbs.
  • The oil prices continue to head higher with the Texas arctic blast becoming a global oil market crisis as millions are still without power.
  • The massive supply disruption is coming at a time when US inventories are shrinking at an accelerated pace and the Organization of the Petroleum Exporting Countries are holding millions of barrels a day off the market.
  • The International Energy Agency (IEA) expects that a recovery in global oil demand would outstrip production in the second half of the year, prompting even quicker inventory draws
  • Meanwhile, WTI Crude closed at $61.08 (+1.03), Bonny Light $61.86 (-0.65), and OPEC Basket $62.60 (+2.06).

Nigeria’s external reserve dips despite rallying oil prices

  • The external reserve dipped further to $35.580 billion as of February 16, 2021.
  • This represents a decline of 0.15% compared to $35.633 billion as of 15th February 2021.
  • The foreign reserve has been on a steady decline since the 25th of January 2021, losing a total of $941 million to date.
  • Meanwhile, this is still an improvement on the $35.37 billion that it was as of December 31, 2020.

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