Naira gains at NAFEX window as foreign reserve continues to experience decline

Wednesday 10th March 2021: The exchange rate between the naira and the US Dollar closed at N411.13 to a dollar at the Investors and Exporters window, where forex is traded officially.

Naira gained marginally against the US Dollar on Wednesday after enduring three days of decline to close at N411.13/$1, representing a 0.21% gain when compared to N412/$1 recorded on Tuesday, 9th March 2021.

Meanwhile, Naira remained stable at the parallel market to close at N482/$1 on Wednesday, 10th March 2021, the same as recorded on the previous trading day. It is worth noting that the currency depreciated twice already this week at the parallel market.

Forex turnover also decreased on Wednesday from $110.01 million recorded on Tuesday to stand at $36.92 million, which represents a 66.4% decrease, while Nigeria’s external reserve position plunges further to $34.71 billion.

Trading at the official NAFEX window

Naira gained marginally against the US Dollar at the Investors and Exporters window on Wednesday to close at N411.13 to a dollar. This represents an 87 kobo gain when compared to N412/$1 recorded on the previous trading day.

  • The opening indicative rate closed at N410.35 to a dollar on Wednesday. This represents a 56 kobo gain when compared to N410.91/$1 recorded on Tuesday.
  • Also, an exchange rate of N415 to a dollar was the highest rate during intra-day trading before it ended the day at N411.13/$1. It also sold for as low as N390/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window plunged by 66.4%% on Wednesday, 10th March 2021.
  • Forex turnover decreased from $110.01  million recorded on Tuesday, March 9, 2021, to $36.02 million on Wednesday, March 10, 2021.

Cryptocurrency watch

The world’s flagship cryptocurrency, Bitcoin soared high to trade at $56,432.01 in the early hours of Thursday, 11th March 2021.

  • This increase came after JP Morgan Chase announced that it has created a new debt instrument that provides selected investors with direct exposure to a basket of crypto-focused firms, which has been filed with the U.S Securities and Exchange Commission.
  •  Meanwhile, Norwegian oil billionaire Kjell Inge Rokke, the owner of Aker Asa, also announced earlier in the week that his company has established a business, Seetee AS to tap into the potential of the cryptocurrency market.
  • According to him, he believes that bitcoin could become the core of a new monetary architecture and each coin could be worth millions of dollars.
  • Meanwhile, Onchain data have revealed that bitcoin exchange balances held on popular trading platforms have continued to deplete since October 2020.
  • The analysis shows that popular trading exchanges like Coinbase, Binance, Huobi, and many other platforms have lost 20% of bitcoin balances during the last 12 months. This suggests that investors are accumulating, rather than selling the bitcoin on exchanges.

Oil prices rally high

Brent Crude oil on Wednesday 10th March 2021 rose by 0.56% to close at $67.9, despite reports by the American Petroleum Institute (API) revealing an estimated crude oil inventory build of as much as 12.79 million barrels for the week ended March 5.

  • The price of Brent Crude had topped $70 per barrel in the early hours of Monday before sliding down on account of the news of an attack by rebel Houthi rebel on the Saudi oil infrastructure on Sunday.
  • The ministry of Suadi Arabia confirmed that shrapnel from a ballistic missile fell near Saudi Aramco’s residential area in Dhahran.
  • The recent increase in oil price can be attributed to OPEC+’s decision to leave production cuts as they are for another month and reports that the supply of crude was tightening globally as demand began to pick up
  • WTI Crude closed at $64.73 (+0.45%), OPEC Basket $66.38, Bonny Light $66.03 (-1.02%), and Natural Gas $2.687 (-0.19%).

External reserve falls to lowest in 10 months

Nigeria’s external reserve continued its decline as it dropped by 0.09% on Tuesday, 9th March 2021 to stand at $34.71 being its lowest position in 10 months

  • The country’s external reserve declined from $34.74 billion recorded as of Monday, 8th March 2021 to stand at $34.71 billion as of 9th March 2021.
  • It was reported earlier that Nigeria’s external reserve fell to its lowest level in 10 months, attributing the downward trend to a number of factors, some of which include; forex market intervention, low foreign inflows into the country etc.
  • The decline in reserves had continued despite the bullish run witnessed in the global oil market.
  • Meanwhile, the CBN has introduced a “Naira4Dollar” scheme in favour of diaspora Nigerians who are seeking to send in money into Nigeria. The is move is aimed at encouraging inflows of diaspora remittances into the country, which is expected to reflect in the nation’s foreign reserve and by extension the exchange rate.

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