Naira falls at the NAFEX window as Nigeria’s external reserve dips $1 billion

Friday 28th May 2021: The exchange rate between the naira and the US dollar closed at N412/$1 at the Investors and Exporters forex window.

The naira depreciated against the US dollar on Friday at the official NAFEX window to close at N412 to a dollar. This represents a 0.24% decline compared to N411/$1 recorded on Thursday, 27th May 2021.

Naira however remained stable on Friday at the parallel market to close at N495/$1 having depreciated from N493/$1 recorded on Thursday. Meanwhile, forex turnover declined by 55.5% to stand at $156.06 million on Friday.

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 N1 decline when compared to the N411/$1 that was recorded the previous day.

  • The opening indicative rate declined by 7 kobo to close at N411.01 to a dollar on Friday, 28th May 2021, as against N411.08/$1 recorded on Thursday.
  • An exchange rate of N430 to a dollar was the highest rate recorded during intra-day trading before it settled at N412/$1. It also sold for as low as 400/$1 during intra-day trading.
  • Forex turnover at the Investors and Exporters (I&E) window decreased significantly by 55.5% on Friday, 28th May 2021.
  • FMDQ revealed that forex turnover reduced from $350.65 million recorded on Thursday, 27th May 2021 to $156.06 million on Friday, 28th May 2021.

Cryptocurrency watch

The world’s most popular cryptocurrency recorded a 3.15% gain on Sunday 30th May 2021 to close at $35,727.42. This represents a $1,095.34 gain.

  • Ethereum also traded bullish on Sunday as it gained 5.69% as of 11:59 pm on Sunday night to close at $2,409.19.
  • Also, the total market capitalisation of the listed cryptocurrencies gained 4.22% on Sunday to close at $1.524 trillion.
  • However, the government of Dubai has issued a warning that it is not officially linked to the DubaiCoin, which gained about 1,000% in 24 hours, and explained that the coin may well be an elaborate scam.
  • Bitcoin, which enjoyed a bullish first quarter of the year leading to an all-time peak of $63,000 per unit in the middle of April, has since lost more than 40% of its value, now trading around $35,000.
  • Meanwhile a British bank, Natwest has launched an alert to urgently warn its customers of cryptocurrency scams, which have been on the rise lately. The bank also provided several tips for its customers who are thinking of investing in bitcoin or other crypto assets.

Crude oil posts marginal gain

The oil market remained relatively flat on Sunday as the price of Brent Crude gained marginally to close at $68.97, representing an increase of 0.36%.

  • WTI also gained marginally by 0.44% to close at $66.61 while natural gas closed at $3,034 representing a gain of 1.61%.
  • Meanwhile, the minister of Science and Technology, Ogbonnaya Onu has stated that Nigeria is implementing efforts to prepare its economy for a post-oil era.
  • To this end, the NNPC signed a deal with international oil majors Shell, Exxon, Total, and Eni to develop an offshore oil block that includes the deepwater Bonga field.
  • It is also worth noting that the NNPC has set plans in motion to acquire a 20% minority equity stake in Africa’s biggest oil refining facility, Dangote Refinery.

External reserve

Nigeria’s external reserve declined by 0.06% on Thursday, 27th May 2021 to stand at $34.26. This means that Nigeria has lost a total of over $1 billion in a little over a  month.

  • The Nigerian foreign reserve has recorded a persistent downtrend for 36 days, with the highest loss coming on 10th May 2021, when the reserves dipped $111.56 million.
  • Foreign reserve has continued to dip since April 2021 despite the bullish trend recorded in the global oil market. It could, however, be attributed to low sales of Nigerian crude due to the resurgence of the COVID-19 in India, one of the highest buyers of Nigerian crude.
  • Meanwhile, the CBN continues to intensify its effort in attracting foreign remittances into the country, which led to the indefinite extension of the “Naira4Dollar” scheme earlier in May.

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