Wednesday, 19th May 2021: The exchange rate between the naira and the US dollar closed at N410.75/$1 at the Nigerian Autonomous Foreign Exchange (NAFEX) market, where forex is traded officially.
Naira appreciated against the US dollar on Wednesday at the Importers and Exporters window to close at N410.75 to a dollar as against N411.63/$1 that was recorded on Tuesday, 18th May 2021. This represents a 0.21% gain, which is also the highest single-day gain recorded so far in May 2021.
Meanwhile, the naira remained stable at the parallel market to close at N484/$1 while dollar supply at the I&E window rose by 122.8% from $58.88 million recorded on Tuesday, 18th May 2021, to $131.16 million.
On the other hand, the crypto market nosedived on Wednesday as over $300 billion was lost in single-day trading.
Trading at the official NAFEX window
Naira gained against the US dollar at the Investors and Exporters window on Wednesday to close at N410.75/$1, representing an 88 kobo appreciation when compared to the N411.63/$1 that was recorded the previous day.
- The opening indicative rate delined by 9 kobo to close at N410.8 to a dollar on Wednesday, 19th May 2021, as against N410.71/$1 recorded on Tuesday.
- An exchange rate of N426.9 to a dollar was the highest rate recorded during intra-day trading before it settled at N410.75/$1. It also sold for as low as 360/$1 during intra-day trading, the lowest since January 11, 2021.
- Forex turnover at the Investors and Exporters (I&E) window increased significantly by 122.8% on Wednesday, 19th May 2021.
- FMDQ revealed that forex turnover rose from $58.88 million recorded on Tuesday, 18th May 2021 to $131.16 million on Wednesday, 19th May 2021.
Cryptocurrency watch
The cryptocurrency market plunged significantly on Wednesday, 19th May 2021, losing about $339.2 billion in market capitalisation, which represents a decline of 16.67%.
- The world’s first cryptocurrency, Bitcoin slumped by 9% to trade below the $40,000 mark, after enduring a plunge of over $5,000 due to high sell-offs by bitcoin holders.
- Ethereum, a highly coveted crypto asset, in the same vein, dipped by 22.16% to trade at $2,629 as of 8:47 pm on Wednesday, while XRP dipped by 25.95% to trade at $1.17981.
- The large sell-offs were attributed to the report that Chinese financial regulators had curbed their financial institutions from involvement with cryptocurrencies, which weighed heavily on the sentiments of investors.
- The bearish trade recorded on Wednesday indicates that bitcoin has now lost all its gains achieved after the announcement of Tesla, that it would purchase $1.5 billion worth of the crypto asset.
Oil price dipped to fear of inflation
Crude oil prices dipped on Wednesday for a second consecutive day due to concerns of above-target inflation as Brent crude failed to hold on to its $70 per barrel recorded on Monday.
- Brent Crude dipped by 2.93% to close at $66.70, while WTI Crude recorded a 3.25% drop in price to close at $63.36 per barrel of oil.
- Natural Gas also dipped by 1.59%, closing at $2.964 on Wednesday.
- The decline was attributed to fear that rising inflation in the US might lead the Federal Reserve to increase interest rates, which could impede economic growth.
- It was also affected by demand concerns due to the upsurge in coronavirus cases in Asian countries, such as India, Taiwan, Vietnam, and Thailand.
External reserve
Nigeria’s external reserve plunged further by $27.6 million on Tuesday, 18th May 2021 to stand at $34.4 billion.
- The nation’s foreign reserve declined from $34.43 billion recorded as of Monday, 17th May 2021 to $34.4 billion on Tuesday, representing a 0.08% decline.
- Nigeria’s foreign reserve has dipped by $851.54 million since 16th April 2021 to date, while year-to-date, the country’s reserve has dipped by about $970.49 million.
- The recurrent decline in external reserve continues despite the recent increases recorded in the crude oil market and the continued effort by the apex bank to increase dollar inflow into the country.
- Recall that the Central Bank earlier in May declared the indefinite continuation of the “Naira4dollar” scheme, which was originally set to end on 8th May 2021.