Naira declines to N408.8/$ at NAFEX window as oil price hit $67

Wednesday 24th February 2021: The exchange rate between the Naira and the US Dollar closed at N408.8 to a dollar at the Investors and Exporters window where forex is traded officially.

Naira lost 20 kobo against the US Dollar to close at N408.8/$1 at the NAFEX window, which represents a 0.05% decline compared to N408.6/$1 recorded on Tuesday.

Meanwhile, the exchange rate remained stable in the parallel market, as it closed at N480/$1 on Wednesday, the same as recorded on the previous trading day.

Brent Crude oil appreciated on Wednesday to close above $67 per barrel, which is only less than $3 from the predicted $70 per barrel made by Goldman Sach earlier in the week.

Trading at the official NAFEX window

Naira depreciated marginally against the US Dollar in the Investors and Exporters window on Wednesday, as it closed at N408.8/$1. This represents a 0.05% loss when compared to N408.6/$1 recorded a day earlier.

  • The opening indicative rate closed at N409.5 to a dollar on Wednesday. This is the same as recorded on Tuesday and is the highest recorded since January 5th, 2021.
  • Also, an exchange rate of N429.75 to a dollar was the highest rate during intra-day trading before it closed at N408.8/$1. It also sold for as low as N390/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window increased by 72.2% on Wednesday, February 24, 2021.
  • Forex turnover increased from $123.37 million recorded on Tuesday, February 23rd, 2021, to $212.43 million on Wednesday, February 24th, 2021.
  • A cursory look at the data shows that Wednesday’s figure of $212.43 million is the highest turnover recorded since 14th January 2021, over a month ago.

Cryptocurrency watch

The world’s flagship crypto, bitcoin recovered partly from its precarious fall on Wednesday, after U.S. Treasury Secretary Janet Yellen and Elon Musk weighed in on Bitcoin’s recent rally.

  • Bitcoin, which at one point lost about $13,000 in value after dropping from its all-time high of $58,330.57 to $45,290.59 within the space of two days.
  • On Wednesday, Bitcoin traded at $49,486.36 as it solidifies its position as the most valuable crypto asset with a market value of $922.3 billion.
  • Meanwhile, major financial leaders have supported the bias of the Central Bank of Nigeria in placing a ban on crypto-related transactions.
  • They warn investors and the public of the dangers of owning bitcoin, as they also stated that the popular crypto asset could be ideal for money laundering and illicit transactions

Oil prices hit $67

Brent crude oil price rose by 2.89% on Wednesday to close at $67.26 compared to $65.37 recorded on Tuesday 23rd February 2021.

  • The increase in price is as a result of Goldman Sach’s prediction that oil prices would climb around $70 per barrel in the second quarter of the year and $75 in Q3 2021. This is $10 above its previous forecasts.
  • According to a report, the increase in oil prices could also be attributed to the restoration of around 80% of lost production after the Texas freeze that had reduced oil supply in recent weeks.
  • Meanwhile, Saudi Arabia and Russia are heading to the OPEC+ meeting next week with varying opinions on whether to add more supply to the market in April, which could shape the performance of the oil market.
  • However, Brent closed at $67.26 (+2.89%), WTI closed at $63.22 (+2.51%), Bonny Light at $63.73 (+1.43%), OPEC Basket ($63.73), and Natural Gas closed at $2.854 (-0.87%).

Dwindling external reserve despite increased oil price

Nigeria’s external reserve dipped marginally by 0.14% on Tuesday 23rd of February 2021, to stand at $35.23 billion.

  • Nigeria’s external reserve position has now hit its lowest level in almost two months.
  • It is worth noting that Nigeria has lost a sum of $1.08 billion in external reserve in February alone.
  • This downturn has continued to persist despite bullish trends in the global crude oil market.

Leave a Reply

Your email address will not be published. Required fields are marked *