Exchange rate gains at official forex market despite reduction in dollar supply. Oil trades at $73.7 pb

Friday, 23rd July 2021: The exchange rate between the naira and the US dollar closed at N411.5/$1 at the official Investors and Exporters window.

Naira appreciated against the US dollar on Friday from N411.63/$1 recorded on Thursday, 23rd July 2021 to N411.5/$1, representing a 0.03% gain. This however represents 0.27% depreciation for the week compared to N410.38/$1 recorded at the close of the week ended 16th July 2021.

On the other hand, naira depreciated against the US dollar at the parallel market on Friday. Naira closed at N504/$1 compared to N503/$1 recorded on Thursday, 22nd July 2021. Meanwhile, Nigeria external reserve received a boost of $53.46 million on 19th July 2021 to close at $33.17 billion.

Trading at the official NAFEX window

Naira appreciated against the US dollar at the Investors and Exporters window on Friday to close at N411.5/$1 from N411.63/$1 recorded at the end of trade on Thursday, 22nd July 2021.

The opening indicative rate also appreciated from N411.57/$1 recorded on Thursday to close at N411.21/$1 on Friday.

An exchange rate of N412.25 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.5/$1, while it sold for as low as N400/$1 during intra-day trading.

Meanwhile, forex turnover at the Investors and Exporters (I&E) window declined marginally by 1.9% on Friday, 23rd July 2021.

Forex turnover decreased from $137.83 million recorded on Thursday, 22nd July 2021 to $135.28 million on Friday, 23rd July 2021.

Cryptocurrency watch

The global cryptocurrency market started the week on a positive note as investors gained $94.86 billion in the early trading hours on Monday.

The total crypto market capitalization increased by 6.76% on Monday morning at $1.51 trillion, largely attributed to the stellar position of Bitcoin with 8.11% growth.

The world’s most popular cryptocurrency recorded a boost on Monday, 26th July 2021 as it traded at $38,331 as of 5:30 am, representing a gain of $2,906.07.

Ethereum also followed with a bullish trade at 5.89% growth rate to trade at $2,323.32 on Monday.

Nigeria’s central bank also plans to launch its own digital currency by October 2021. Recall that earlier in the year, the apex bank warned and reminded local financial institutions against facilitating payments for crypto exchanges, a move widely condemned by young Nigerians who traded in these digital assets.

The Governor of the CBN, Godwin Emefiele announced during a press briefing of the MPC meeting that Nigeria will be launching its own digital currency.

Crude oil price starts week bearish

Oil prices resumed the new week on a bearish mode, as Brent crude dips 0.54% to trade at $73.7 per barrel at the early hours of Monday morning, despite recovering from a significant dip recorded in the previous week.

The bearish trade was due to the enhanced prospect of increased supply of crude oil in global market, as the OPEC+ agreed to increase production supply.

As of the time of writing this article, Brent crude was already trading at $73.66, WTI ($71.61), Bonny Light ($72.8), while Natural Gas at $4.032.

Recall that India, one of Nigeria’s highest importers of crude oil recorded a significant drop in oil imports due to the effect of the covid-19 pandemic on its economy, which affects Nigeria due to the negative effect posed to its foreign reserve as well as the naira’s exchange rate.

External reserve

Nigeria’s external reserve position grew by $53.48 million on Monday, 19th July 2021 to close at $33.17 billion as against $33.18 billion recorded as of the week ended 16th July 2021.

Nigeria’s foreign reserve has been under immense pressure in recent times, further decimated by the effects of covid-19 on Nigeria’s dollar earnings, the decline in crude oil prices, the shrink in foreign inflows and diaspora remittances.

A cursory look at the historic data obtained from the CBN shows that Nigeria boasted of an external reserve of as high as $45 billion as of this time in 2019, an amount that has since been depleted by about $12 billion in the space of two years.

Meanwhile, the latest boost which has been sustained for five days will come as good news to the Nigerian government and the CBN as the positive trend means increased forex to cater for the backlog of expenses.

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