Naira falls at parallel market as CBN formally adjusts official rate to N410.25/$

Tuesday, 25th May 2021: The exchange rate between the naira and the US dollar closed at N411.56/$1 at the Importers and Exporters window, where forex is traded officially.

Naira depreciated against the US dollar on Tuesday at the official NAFEX window to close at N411.56 to a dollar. This represents a 0.08% drop when compared to N411.25/$1 recorded on Monday, 24th May 2021.

Also, the Naira depreciated at the parallel market, closing at N487/$1 on Tuesday, May 25, 2021. This shows a N1 drop when compared to the N486/$1 that was recorded the previous day.

The Central Bank of Nigeria moved towards exchange rate unification as it further adjusted the exchange rate and formally adopted the NAFEX rate as the official rate.

Trading at the official NAFEX window

Naira depreciated against the US dollar at the Investors and Exporters window on Tuesday to close at N411.56/$1, representing a 31 kobo drop when compared to the N411.25/$1 that was recorded the previous day.

  • The opening indicative rate remained relatively stable as it closed at N411.01 to a dollar on Tuesday, 25th May 2021.
  • An exchange rate of N420.50 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.56/$1. It also sold for as low as N363/$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 declined from $211.86 million recorded on Monday, 24th May 2021 to $130.50 million on Tuesday, 25th May 2021.

Cryptocurrency watch

The world’s biggest cryptocurrency, Bitcoin, is heading towards the $40,000 mark as it rose by about 3.02% on Tuesday evening to close at $39,437.80 as cryptos bounce back from sell-off and recover some of the ground lost in this month’s volatile rout.

  • This was after Bitcoin, the world’s most valuable cryptocurrency, had traded lower earlier on Tuesday as the energy usage debate put pressure on investors.
  • Cryptocurrencies have swung wildly in recent days after billionaire Elon Musk criticized Bitcoin’s energy consumption and said Tesla Inc. was suspending payments using the token.
  • While die-hard cryptocurrency adherents believe the bull market in Bitcoin has just paused, other commentators are more circumspect.
  • Ether, the coin linked to the Ethereum blockchain network, rose by over 9.74% to close at $2,829.89 on Tuesday evening, gaining over $245 in the last 24 hours. Its trading volume also rose.

Crude oil rises

Oil prices rose by 2% on Tuesday with Brent crude closing at $68.71 on renewed optimism about global demand as global vaccinations continue. Also, concerns about a rush of new supply from Iran eased.

  • Oil rose on a bullish report by the American Petroleum Institute (API) on Tuesday disclosing a draw in crude oil inventories of 439,000 barrels for the week ending May 21.
  • The IEA made headlines last week when it suggested that there should be no new oil and gas investments after 2021 and If that were to happen, with a supply crunch already looming, the oil traders at OPC Markets would have a great time.
  • Meanwhile, Iran had said that gaps remain in negotiations with the U.S., which helped push up crude oil prices.
  • Also, OPEC has insisted that it will force overproducing members to comply and compensate for pumping above their respective quotas in recent months
  • WTI Crude dropped by 0.18% on Tuesday to close at $65.95, Bonny light rose by 0.67% to close at $67.33, while Natural Gas rose by 0.79% to close at $2.936.

External reserve

Nigeria’s external reserve plunged further by $37 million on Monday, 24th May 2021, to close at $34.294 billion.

  • The nation’s foreign reserve declined from $34.331 billion recorded as of Friday, 21st May 2021 to $34.294 billion on Monday, representing a 0.11% drop.
  • Nigeria’s foreign reserve has dipped by $961.1 million since 16th April 2021 when the decline started, while year-to-date, the country’s reserve has dipped by about $1.08 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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