Exchange rate falls across FX markets. Cryptos dip further following massive sell-off

Friday, 21st May 2021: The exchange rate between the naira and the US dollar closed at N412/$1 at the Importers and Exporters window, where forex is traded officially.

Naira fell against the US dollar on Friday at the official NAFEX window to close at N412 to a dollar. This represents a 0.17% drop when compared to N411.31/$1 recorded on Thursday, 20th May 2021.

Also, the Naira depreciated marginally at the parallel market, closing at N485/$1 on Friday, May 21, 2021. This shows a N1 drop when compared to the N484/$1 that was recorded the previous day.

The massive sell-off of cryptocurrencies continued as the crypto market plunged despite supporting tweet from Elon Musk.

Crude oil prices have continued to dip further away from the $70 per barrel recorded last 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 Friday to close at N412/$1, representing a 69 kobo decline when compared to the N411.31/$1 that was recorded the previous day.

  • The opening indicative rate closed at N411.08 to a dollar on Friday, 21st May 2021, representing an 8 kobo drop when compared to the N411/$1 recorded on Thursday.
  • An exchange rate of N415 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.08/$1. It also sold for as low as 394/$1 during intra-day trading.
  • Forex turnover at the Investors and Exporters (I&E) window declined by 25.3% on Friday, 21st May 2021.
  • FMDQ revealed that forex turnover dropped from $120.08 million recorded on Thursday, 20th May 2021 to $89.72 million on Friday, 21st May 2021.

Cryptocurrency watch

The world’s largest cryptocurrency, Bitcoin, dropped by about 12% on Sunday evening to close at $33,515.76, representing an over $4,550 drop within the last 24 hours.

  • Bitcoin, the world’s most valuable cryptocurrency, is down by almost 50% from this year’s peak of $64,895.22 on April 14, as it suffered another sell-off that left it crashing.
  • Similarly, Ether, the coin linked to the Ethereum blockchain network, dropped 11.47% to close at $2,074.14 on Sunday evening, losing $269.07 in the last 24 hours.
  • Both Bitcoin and Ether, the second-largest crypto, have now lost half their value from all-time highs set last month.
  • Tesla Inc. Chief Executive Officer, Elon Musk, tweeted on Saturday, in support of crypto but this failed to stop the selling pressure and the market plunge.

Crude oil rises

Crude oil prices rose on Sunday evening as oil stabilised after a volatile week with the Brent crude rising by 2.04% to close at $66.44.

  • Oil benchmarks suffered their worst week in more than a month as the market considered the consequences of a potential nuclear deal that could lift U.S. sanctions against Iranian crude.
  • Analysts suggest that the key to whether the potential rise in Iranian output upsets global inventory drawdowns is how early the country re-enters the oil market.
  • Meanwhile, there have been reports 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 rose by 2.65% on Thursday to close at $63.58, Bonny light rose by 0.74%, while Natural Gas dropped by 0.65% to close at $2.906.

External reserve

Nigeria’s external reserve plunged further by $26 million on Thursday, 20th May 2021, to close at $34.352 billion.

  • The nation’s foreign reserve declined from $34.379 billion recorded as of Wednesday, 19th May 2021 to $34.352 billion on Thursday, representing a 0.08% drop.
  • Nigeria’s foreign reserve has dipped by $902.1 million since 16th April 2021 when the decline started, while year-to-date, the country’s reserve has dipped by about $1.021 billion.
  • The decline in external reserve continues despite recent increases recorded in the crude oil market and the various policies by the apex bank aimed at boosting dollar inflow and remittances into the country.
  • The decline could be attributed to reports of a drop in crude oil exports from the country which has been exacerbated by the decline in crude oil import by India, the biggest buyer of Nigeria’s crude oil and a nation still heavily hit by the Covid-19 pandemic.

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