Naira depreciates at black market despite gains at official window

Monday, 24th May 2021: The exchange rate between the naira and the US dollar closed at N411.25/$1 at the Importers and Exporters window, where forex is traded officially.

Naira appreciated against the US dollar on Monday at the official NAFEX window to close at N411.25 to a dollar. This represents a 0.18% gain when compared to N412/$1 recorded on Friday, 21st May 2021.

However, the Naira depreciated at the parallel market, closing at N486/$1 on Monday, May 24, 2021. This shows a N1 drop when compared to the N485/$1 that was recorded the previous day.

The foreign exchange market liquidity was boosted significantly by a 136.13% increase in dollar supply.

Trading at the official NAFEX window

Naira appreciated against the US dollar at the Investors and Exporters window on Monday to close at N411.25/$1, representing a 75 kobo gain when compared to the N412/$1 that was recorded the previous day.

  • The opening indicative rate closed at N411 to a dollar on Monday, 24th May 2021, representing an 8 kobo gain when compared to the N411.08/$1 recorded on Friday.
  • An exchange rate of N420.50 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.25/$1. It also sold for as low as 387.67/$1 during intra-day trading.
  • Forex turnover at the Investors and Exporters (I&E) window increased significantly by 136.13% on Monday, 24th May 2021.
  • FMDQ revealed that forex turnover rose from $89.72 million recorded on Friday, 21st May 2021 to $211.86 million on Monday, 24th May 2021.

Cryptocurrency watch

The world’s largest cryptocurrency, Bitcoin, jumped near $40,000 as it surged by about 10% on Monday evening to close at $38,600.18 after Musk’s tweet.

  • Bitcoin, the world’s most valuable cryptocurrency, held gains after Elon Musk’s effort to bolster the token’s green credentials stoked a rally, extending a bout of market volatility following last week’s crypto rout.
  • Musk took to Twitter to signal support for an apparent effort by Bitcoin miners to make their operations more environmentally friendly.
  • Similarly, Ether, the coin linked to the Ethereum blockchain network, rose by over 19% to close at $2,586.22 on Monday evening, gaining over $500 in the last 24 hours.
  • According to Forbes, a leaked report from Wall Street giant Goldman Sachs has given Ethereum, the second-largest cryptocurrency with a market capitalization of around $250 billion compared to Bitcoin’s $660 billion, a high chance of overtaking Bitcoin as a dominant store of value, calling it the “Amazon of information.”

Crude oil rises

Crude oil prices rose again by over 2% on Monday with Brent crude closing at $68.65 supported by market expectations that fuel demand globally is rising, with the re-opening of major economies in Europe and higher travel numbers in the United States.

  • Oil prices rebounded from last week’s Iran deal optimism-inspired rout, as a new potential snag emerged in reviving the 2015 Iran nuclear deal that could add more oil supply.
  • The speaker of Iran’s parliament on Sunday said that a 3-month monitoring deal between Iran and the U.N. nuclear watchdog had expired and that the country would block inspectors from accessing nuclear site images.
  • Goldman Sachs said on Sunday that the case for higher prices remained intact even with increased Iran exports.
  • WTI Crude rose by 0.15% on Monday to close at $66.15, Bonny light rose by 2.09% to close at $66.88, while Natural Gas dropped by 3.06% to close at $2.886.

External reserve

Nigeria’s external reserve plunged further by $22 million on Friday, 21st May 2021, to close at $34.331 billion.

  • The nation’s foreign reserve declined from $34.353 billion recorded as of Thursday, 20th May 2021 to $34.331 billion on Friday, representing a 0.06% drop.
  • Nigeria’s foreign reserve has dipped by $924.1 million since 16th April 2021 when the decline started, while year-to-date, the country’s reserve has dipped by about $1.043 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 to India, the biggest buyer of Nigeria’s crude oil and a nation still heavily hit by the Covid-19 pandemic.

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