Naira falls to N411.31/$1 at the NAFEX window following oil price plunge to $65.11pb

Thursday, 20th May 2021: The exchange rate between the naira and the US dollar closed at N411.31/$1 at the Importers and Exporters window, where forex is traded officially.

Naira fell against the US dollar on Thursday at the official NAFEX window to close at N411.31 to a dollar. This represents a 0.14% depreciation when compared to N410.75/$1 recorded on Wednesday, 19th May 2021.

Naira, however, remained stable on the parallel market, closing at N484/$1 as was recorded the previous day, while forex turnover in the official market declined marginally by 8.4% to stand at $120.08 million.

Crude oil prices have continued to dip further away from the $70 per barrel recorded earlier in the week, currently trading at $65.15 (Brent Crude), after recording a decline of 2.23% on Thursday.

Trading at the official NAFEX window

Naira depreciated against the US dollar at the Investors and Exporters window on Thursday to close at N411.31/$1, representing a 56 kobo decline when compared to the N410.75/$1 that was recorded the previous day.

  • The opening indicative rate delined by 20 kobo to close at N411 to a dollar on Thursday, 20th May 2021, as against N410.8/$1 recorded on Wednesday.
  • An exchange rate of N421 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.31/$1. It also sold for as low as 386/$1 during intra-day trading.
  • Forex turnover at the Investors and Exporters (I&E) window declined marginally by 8.4% on Thursday, 20th May 2021.
  • FMDQ revealed that forex turnover dropped from $131.16 million recorded on Wednesday, 19th May 2021 to $120.08 million on Thursday, 20th May 2021.

Cryptocurrency watch

Major cryptos recorded a boost on Thursday from the crash that was witnessed on Wednesday, where bitcoin and Ethereum lost 9% and 22.16% respectively.

  • The world’s most valued cryptocurrency, #Bitcoin recovered with a 10.17% growth to close at $40,521.82 on Thursday, representing a $3,741.39 gain.
  • Similarly, Ethereum gained 15.65% in the crypto market to close at $2,829.85 as of 9:28 pm on Thursday, while XRP surged by 12.89% to close at $1.19724.
  • The crypto market gained $216.959 billion on Thursday, indicating a gain of 14.05% to close at $1.762 trillion.
  • However, several cryptocurrencies are still showing double-digit percentage losses from where they were before the slump.

Crude oil dips further

Crude oil prices dipped further away from the $70 per barrel recorded earlier in the week, as Brent Crude recorded a decline of 2.33% to close at $65.11 on Thursday.

  • The bearish trade came on the back of the president of Iran’s claim that the world powers have accepted during the latest round of talks to lift the sanctions against Iran.
  • Meanwhile, reports suggest that Nigeria has been struggling to sell some of its oil in the global oil market, due to the reduction in the buying capacity of India as a result of the covid upsurge.
  • The decline in oil sales by Nigeria was also attributed to the increased exportation of light crude oil by the United States, which competes with Nigeria’s oil.
  • WTI Crude also dipped by 2.07% on Thursday to close at $62.05, while Natural Gas gained 0.92$ to close at $2.952.

External reserve

Nigeria’s external reserve plunged further by $24.6 million on Wednesday, 19th May 2021 to stand at $34.38 billion.

  • The nation’s foreign reserve declined from $34.4 billion recorded as of Tuesday, 18th May 2021 to $34.38 billion on Wednesday, representing a 0.07% decline.
  • Nigeria’s foreign reserve has dipped by $876.1 million since 16th April 2021 when the decline started, while year-to-date, the country’s reserve has dipped by about $995.1 million.
  • The recurrent decline in external reserve continues despite recent increases recorded in the crude oil market and the continued effort by the apex bank to increase dollar inflow into the country.
  • This non-reflection of the oil market gain on Nigeria’s external reserve could be attributed to India’s inability to import as much oil due to the covid crisis currently ravaging the highest importer of Nigeria’s oil.

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