Naira closes at N409.8/$1 at NAFEX as oil price crashes to $60

The exchange rate between the naira and the US Dollar closed at N409.8/$1 at the I&E window as oil prices crashed to the $60 per barrel region.

Tuesday, 23rd March 2021, the exchange rate between the naira and the US Dollar closed at N409.8/$1 at the Investors and Exporters window, where forex is traded officially.

Naira gained against the US Dollar to close at N409.8/$1 on Tuesday, 23rd March 2021, representing a 0.08% gain when compared to N410.13 recorded in the previous day.

Meanwhile, the exchange rate remained stable at the parallel market to close at N486 to a dollar, the same as recorded on Monday, 22nd March 2021.

The gain in the Investors and Exporters window came after the Governor of the apex bank reiterated that the CBN does not practice a floating exchange rate, rather it practices a managed float exchange rate.

He said this while responding to questions relating to a Bloomberg report, suggesting that the Central Bank is adopting a new floating exchange policy.

Trading at the official NAFEX window

Naira appreciated against the US Dollar at the Investors and Exporters window on Tuesday to close at N409.8/$1. This represents a 33 kobo gain when compared to N410.13/$1 recorded on Monday, 22nd March 2021.

  • The opening indicative rate closed at N409.78 to a dollar on Tuesday. This represents a N0.92k gain when compared to N410.7/$1 recorded on Monday.
  • Also, an exchange rate of N412 to a dollar was the highest rate recorded during intra-day trading before it closed at N409.8/$1. It also sold for as low as N393/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window increased by 27.9% on Tuesday, 23rdd March 2021.
  • FMDQ showed that forex turnover declined from $25.88 million recorded on Monday, March 22, 2021, to $33.11 million on Tuesday.

Cryptocurrency watch

The world’s most popular and valued cryptocurrency as of 4am on Tuesday, 24th March, traded at $54,299.31, representing a decline of 0.11%.

  • The highly-priced digital currency had slumped about 6% earlier on Tuesday to near the $53,000 level after the US Federal Reserve Charman Jerome Powell said people must realize the risks of investing in the currency and other digital tokens.
  • According to a report, Powell said the volatility of the coins undermines their ability to store value, a basic function of currency. “They’re highly volatile, see Bitcoin, and therefore not really useful as a store of value,” He said.
  • Meanwhile, Ethereum currently trades at $1,679.58, indicating a 0.56% gain as of the time of writing this article.

Oil price slumps by 6.7%

Oil prices crashed by over 6% on Tuesday as major European countries such as Italy, France, and Germany either extended or declared new lockdowns in the country.

  • Brent Crude oil slumped by 6.65% to trade at $60.32 per barrel as at 9:55 pm on Tuesday as bearish sentiment returns to the market after Covid-related restrictions in Europe increased.
  • The crash in global oil prices is attributed to the revived fear in the resurgence of the covid-19 in major countries in Europe, prompting concerns about mobility and oil demands in coming weeks as they begin fresh rounds of lockdowns.
  • A stronger US dollar also affected oil prices on Tuesday, as investors flocked to haven asset classes such as the US Treasuries and avoided riskier assets such as the crude market.
  • Brent Crude dipped by 5.93% to close at $60.79, Natural gas ($2.517), WTI Crude ($57.39), Bonny Light at $62.91,

External reserve

Nigeria’s external reserve grew by 0.34% on Monday, 23rd March 2021 to stand at $34.57 billion. This represents the second consecutive growth recorded in the past 36 days.

  • A cursory look at the data obtained from the Central Bank of Nigeria showed that Nigeria’s external reserve position moved from $34.46 billion as of 19th March 2021 to stand at $34.57 billion.
  • The current reserve value, however, represents a $527.92 million decline when compared to $35.1 billion recorded as of 26th February 2021.
  • The recent decline recorded in the country’s external reserve had been attributed to the intervention of the Central Bank in the foreign exchange market, however, the governor of the apex bank stated after his MPC briefing that the CBN has not intervened in the I&E market since January 2012.
  • Also, he stated that the CBN disburses $80 million weekly to commercial banks to deal with the FX demands.

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