Naira devalues across forex markets as CBN confirms adjustment of official rate

The exchange rate between the naira and the US Dollar depreciated to close at N410.25/$1 at the Investors and Exporters (NAFEX) window, where forex is traded officially. This is as the CBN Governor has suggested that the official exchange rate has been devalued.

Similarly, at the parallel market where forex is traded unofficially, the naira depreciated closing at N482/$1 on Friday, February 26. This represents 0.42% drop when compared to the N480/$1 that it closed on the previous trading day.

However, forex turnover at the Investor and Exporters (I&E) window decreased by 79.3% from $212.43 million recorded on Wednesday to $43.97 million on Thursday 25th February 2021.

Trading at the official NAFEX window

The Naira depreciated against the US Dollar at the Investors and Exporters window on Friday closing at N410.25/$1. This represents a 0.39% drop when compared to N408.67/$1 recorded on Thursday, February 25, 2021.

  • The opening indicative rate closed at N409.24 to a dollar on Friday. This represents an 8 kobo drop when compared to N409.16/$1 recorded on Thursday.
  • Also, an exchange rate of N415 to a dollar was the highest rate during intra-day trading before it closed at N410.25/$1. It also sold for as low as N392/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window dropped by 14.7% on Friday, February 26, 2021.
  • Forex turnover decreased from $43.97 million recorded on Thursday, February 25, 2021, to $37.49 million on Friday, February 26, 2021.

Cryptocurrency watch

The world’s largest cryptocurrency, Bitcoin, dropped 6.39% to close at $43,165.78 on Sunday, losing $2,944.20 from its previous close.

  • Bitcoin has lost 26% from the year’s high of $58,354.14 on February 21, when it went up amid increasing confidence that it will become a mainstream investment and payments vehicle.
  • A quick recap of bitcoin’s worst weekly performance since March 2020, shows that the week’s high volatility was not caused by one factor. It was largely triggered by an overheated derivatives market as traders rushed to exit leveraged bets that had accumulated.
  • Further drops had coincided with a sell-off in the broader stock market due to rising concerns over surging bond yields, which might reduce the attraction for riskier assets like cryptocurrencies.
  • Etherium dropped 8.88% to close at $1,329.46 on Sunday, losing $129.57 from its previous close.
  • Meanwhile, Nigeria’s Vice President, Yemi Osibanjo, while disagreeing with the CBN on its recent ban on cryptocurrencies, called for crypto regulation knowing fully well the role it plays in the global financial ecosystem. Osibanjo advised CBN and SEC to create a regulatory road map for cryptocurrencies.

Oil price dip marginally on account of pullbacks

Brent crude oil price closed at $64.42 per barrel, dropping $1.69, the WTI Crude closed at $61.50 per barrel, dropping $2.03, OPEC Basket closed at $65.42, gaining $1.42 while the Bonny Light closed at $64.33 per barrel, dropping $1.20.

  • These forecasts have called for an increase in crude oil supply in response to prices climbing above the pre-pandemic level.
  • Analysts are also expecting that next week’s meeting of OPEC and its allies will result in more supply returning to the market.
  • U.S. crude oil production fell in December to an average 11.063 million barrels per day, when compared to the average of 12.8 million barrels per day that was achieved in December 2019, according to the Energy Information Administration’s latest monthly report.
  • U.S. crude oil production fell an average of 58,000 barrels per day, the EIA said on Friday.

The steady decline in external reserves

Nigeria’s external has declined by 0.15% to stand at $35.17 billion as of February 24th 2021 compared to $35.23 recorded as of 23rd February.

  • This indicates that Nigeria has lost a total of $1.13 billion in external reserve positive in the month of February.
  • According to data obtained from the Central Bank of Nigeria (CBN), external reserves declined from $36.3 billion as of 29th of January 2021 to $35.17 billion as of 24th of February.
  • It is however worth noting that the decline in Nigeria’s external reserve has persisted despite a sharp increase in global crude oil prices as it is currently over $64 per barrel from $55.04 recorded as at the end of January.

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