Naira depreciates across FX markets despite increase in dollar supply

Friday, 14th May 2021: The exchange rate between the naira and the US dollar closed at N411.67/$1 at the Importers and Exporters window, where forex is traded officially.

Naira depreciated further against the US dollar, for the fourth consecutive trading session to close at N411.67 on Friday, 14th May 2021. This represents a 42 kobo depreciation compared to N411.25/$1 recorded on Tuesday, 11th May 2021.

The exchange rate also depreciated in the parallel market on Friday to close at N484/$1 compared to N483/$1 recorded a day before, following the Eid-el-Fitr two-day holiday. Naira declined across both markets despite the 106.9% increase in dollar supply.

Trading at the official NAFEX window

The naira depreciated against the US dollar at the Investors and Exporters window on Friday to close at N411.67/$1, representing a 0.1% drop when compared to the N411.25/$1 that was recorded on Tuesday.

  • The opening indicative rate closed at N410.4 to a dollar on Friday, 14th May 2021, representing a 7 kobo drop when compared to the N410.33/$1 recorded on Tuesday.
  • Also, an exchange rate of N426.67 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.67/$1. It, however, sold for as low as N394/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window rose significantly by 106.9% on Friday, 14th May 2021.
  • FMDQ showed that forex turnover increased from $98.33 million recorded on Tuesday, 11th May 2021 to $203.42 million on Friday, 14th May 2021.

Cryptocurrency watch

The value of Bitcoin dipped by 4.16% on Sunday 16th May 2021 to trade at $44,782.85 as of 9:24 pm, Nigerian time.

  • The highly-priced digital asset recorded a decline of 4.16%, losing over $1,950 during inter-day trading.
  • Ethereum also dipped by 6.88% to trade at $3,395, having lost about $246 during the day’s trading.
  • The total crypto market capitalisation also declined by 4.32% to close at 42.05 trillion.
  • The decline came after Tesla CEO Elon Musk did not outrightly deny that his electric car company has sold or could soon sell all of its bitcoin holdings as a result of the criticism he received after suspending bitcoin as a form of payment.

Crude oil record marginal gain

The prices of crude oil recorded a marginal growth on Sunday, 16th May 2021 as Brent Crude appreciated by 0.22% to close at $68.86 per barrel.

  • It had witnessed bearish trade sessions during the week, dropping about 3% on Thursday during intra-day trading after the restart of Colonial Pipeline eased some of the concerns about gasoline shortages in the U.S. East Coast.
  • Oil prices returned to winning ways when reports from both OPEC and the International Energy Agency (IEA) reiterated the view that global oil demand would rebound strongly in the second half of the year with more economies reopening and increased travel amid higher vaccination rates.
  • Brent Crude closed at $68.86 (+0.22%), WTI Crude closed at $65.5 indicating 0.2% gain, Bonny Light, $67.38 (+1.77%), OPEC Basket (-2.39%) to close at $66.57 while Natural gas also grew by 2.67% to close at $3.040].

External reserve

Nigeria’s external reserve dipped further on Tuesday, 11th May 2021 as it declined by 0.07% to close at $34.58 billion.

  • This represents a decline for the 16th consecutive day and a total loss of $675 million.
  • Nigeria continues to record a decline in its external reserve position level, despite the positive rally witnessed in the global oil market as oil price edged towards $70 per barrel.
  • Meanwhile, it is hoped that the “Naira4dollar” scheme implemented by the Central Bank of Nigeria will help boost the country’s reserve position in the short to medium time.

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