Naira depreciates at official window as dollar supply drops significantly by 43%

Thursday, 24th June 2021: The exchange rate between the naira and the US dollar closed at N411.67/$1 at the official Investors and Exporters window.

Naira depreciated marginally on Thursday against the US dollar to close at N411.67 to a dollar compared to N411.50/$1 recorded on Wednesday, 23rd June 2021.

The exchange rate remained stable for the third consecutive day at the parallel market to close at N500/$1 on Thursday, June 24, 2021. This was the same rate that was recorded on Wednesday, June 23, 2021.

The local currency was down at the official window as forex liquidity dropped by 43.2%.

Meanwhile, the Governor of the Central Bank of Nigeria, Godwin Emefiele advised investors in the U.K that he expects the true value of the naira to be between N430-440 to the dollar and not the black-market rate which closed at about N500/$1.

Trading at the official NAFEX window

Naira depreciated against the U.S dollar at the Investors and Exporters window on Thursday to close at N411.67/$1, representing a 17 kobo drop when compared to the N411.50/$1 that was recorded the previous day.

  • The opening indicative rate closed at N411.42 to a dollar on Thursday, 24th June 2021, representing a 27 kobo drop when compared to the N411.15/$1 recorded on Wednesday, 23rd June 2021.
  • Also, an exchange rate of N420.80/$1 was the highest rate recorded during intra-day trading, before it settled at N411.67/$1. It also sold for as low as N401/$1 during intra-day trading.
  • Forex turnover at the Investors and Exporters (I&E) window dropped by 43.2% on Thursday, 24th June 2021.
  • MDQ showed that forex turnover declined from $192.75 million recorded on Wednesday, 23rd June 2021 to $109.47 million on Thursday, 24th June 2021.

Cryptocurrency watch

The world’s largest and most popular cryptocurrency, Bitcoin, rose by 7.81% to close at $35,136 on Wednesday evening, as the bearish sentiment waned.

  • Cryptocurrency is becoming increasingly mainstream, with Citigroup being the latest megabank to roll out crypto services to at least some of its customers.
  • The US cryptocurrency exchange Coinbase is entering the Japanese market. The Nasdaq-listed exchange’s subsidiary registered with the Financial Services Agency (FSA), the country’s financial watchdog, on June 18.
  • While Bitcoin and most alternative cryptocurrencies are slowly recovering from the latest market sell-off, the price of the coin internet computer (ICP), which was once the star of the space, crashed from $630 to $34 in less than two months.
  • The second-largest cryptocurrency by market value, Ethereum rose by 4.74% on Thursday evening to close at $1,991.12.

Crude oil

Crude oil continued its positive performance as it rose on Thursday with the Brent Crude closing at $75.62 per barrel as oil prices hit a nearly 3-year high on new market optimism.

  • Brent crude oil rose by 0.08% as of Thursday evening, 24th June 2021, to close at $75.62 per barrel.
  • The higher prices are welcome news for the oil markets, and can largely be attributed to falling US inventories, a rosier oil demand outlook, and a statement made by the US government denying Iran’s earlier statement that the US had agreed to lift all sanctions related to Iranian crude oil.
  • Oil is heading for a fifth weekly gain, the longest winning streak since December, as crude inventories shrink and the market tightens ahead of an OPEC+ meeting that will consider pumping more crude.
  • The OPEC+ group, led by Saudi Arabia and Russia, are set to meet July 1 and the group is widely expected to raise output in August.
  • WTI Crude rose by 0.10% to close at $73.37, Bonny Light dropped by 0.45% to close at $74.74 per barrel, OPEC Basket recorded a 1.20% gain to close at $74.01, while Natural Gas was up by 0.44% to close at $3,433 after initially recording some gains earlier in the day.

External reserve

Nigeria’s external reserve continued its slide on Wednesday, 23rd June 2021 as it dropped by $42 million to close at $33.592 billion.

  • This represents a 0.12% decline compared to $33.634 billion recorded on Tuesday, 22nd June 2021.
  • A total of $1.782 billion has been lost in reserves year-to-date, while month-to-date loss stands at $484.5 million.
  • Nigeria’s forex reserve continues to trend downwards despite the positive rally recorded in the global crude oil market, with Brent crude currently trading at $75.62 per barrel.
  • It is worth noting that India’s oil imports have started recovering after months of lessened activities due to the covid-19 pandemic’s effect on the country’s economy.

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