Exchange rate gains at parallel market as CBN moves to launch digital currency in October

Thursday 22nd July 2021:  The exchange rate between the naira and the US dollar closed at N411.63/$1 at the official forex market.

Naira appreciated against the US dollar on Thursday, 22nd July 2021 to close at N411.63/$1. This represents a 4 kobo gain when compared to N411.67/$1 that was recorded on Monday, 19th July 2021.

At the parallel market, however, the naira remained stable against the US dollar at an exchange rate of N503/$1, the same rate that was recorded on Monday 19th July 2021.

However, the dollar supply at the official forex market dropped by 18.1% on Thursday to stand at $137.83 million as external reserve continues its rebound.

Trading at the official NAFEX window

Naira appreciated against the US dollar at the Investors and Exporters window on Thursday to close at N411.63/$1 as against the N411.67/$1 recorded on Monday, 19th July 2021.

The opening indicative rate stood at N411.57/$1 on Thursday, representing a 47 kobo drop when compared to N411.10/$1 recorded in the previous trading session.

An exchange rate of N412.78/$1 was the highest rate recorded during intra-day trading before it settled at N411.63/$1, while it sold for as low as N403.22/$1 during intra-day trading.

Meanwhile, forex turnover at the Investors and Exporters (I&E) window dropped by 18.1% on Thursday, 22nd July 2021.

Forex turnover declined from $168.19 million recorded on Monday, 19th July 2021 to $137.83 million on Thursday, 22nd July 2021.

Cryptocurrency watch

The world’s most popular and largest cryptocurrency, Bitcoin, continued its rebound for the second consecutive day to close at $32,267.63 as of Thursday evening, rising by 0.70%.

Bitcoin steadied as traders mulled the largest cryptocurrency’s next move following a rebound stoked by comments from Elon Musk, Jack Dorsey and Cathie Wood.

Other cryptocurrencies such as Ethereum and Dogecoin, held onto gains, as did the Bloomberg Galaxy Crypto Index.

Some $1.3 trillion has been wiped off the market value of cryptocurrencies since mid-May.

Bitcoin has faced a range of obstacles, including stepped-up regulatory scrutiny in China, Europe and the U.S. and concerns about the energy needed by the computers underpinning it. Investors have also generally become more cautious about speculative assets.

Meanwhile, the second-largest cryptocurrency by market capitalization, Ethereum, was up by 2.16%, to close at $2,024.34.

Crude oil

Crude oil prices held its biggest gain in 3 months amid expectations that recovering demand will soon tighten global markets as Brent crude rose by 2.16% to close at $73.79 per barrel on Thursday evening.

Oil rose to the highest in a week amid expectations that recovering demand from the U.S. to India and Europe will further tighten global crude markets.

Oil has rebounded after an almost 8% loss on Monday as fears around the delta variant and its impact on economic recovery shook broader markets.

The price plunge came just after a weekend meeting of OPEC+, at which the 23-nation alliance led by Saudi Arabia and Russia finalized plans to restore halted production.

Since then, the market has been recovering as traders anticipate that OPEC+’s scheduled output increases aren’t large enough to avert a shortfall in the coming months.

Meanwhile, according to reports, the world’s top oil importer, China, has started to release over 20 million barrels of crude oil from its strategic reserve in a move seen as seeking to curb the recent oil price rally.

Brent Crude rose by 2.16% to close at $73.79 per barrel, WTI dropped by 0.24% to close at $71.74 after initially climbing 2.3% earlier on Thursday. Natural Gas dropped by 0.20% to close at $3.995, while OPEC basket dropped by 4.44% to close at $69.93 per barrel.

However, the Bonny Light rose by 3.70% to close at $70.87 per barrel.

External reserve

Nigeria’s foreign reserve continued its rebound as it rose by $53 million on Monday, 19th July 2021, to close at $33.171 billion as against the N33.118 billion that was recorded on Friday, 16th July 2021.

Nigeria’s reserve had recorded a significant reduction in recent times, losing about $219.42 million month-to-date and about $2.27 billion from January to date.

The change in tide to a positive is an indication of increased forex earnings, which would come as a relief for Nigeria, as an increase in external reserve will help Nigeria meet up with pent-up financial obligations.

The increase will also serve as a relief for Nigeria’s exchange rate, which had been on a downturn lately, crossing the N500/$1 mark at the parallel market.

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