Naira maintains steady gain at black market

Wednesday, 4th August 2021:  The exchange rate between the naira and the US dollar closed at N411.50/$1 at the official Investors and Exporters window.

Naira remained stable against the US dollar to close at N411.50/$1 on Wednesday, the same rate when compared to N411.50/$1 recorded on the previous day.

Also, naira appreciated at the parallel market to close at N506/$1, having traded at N508/$1 the previous day. This represents a N2 gain when compared to the previous day’s rate.

The strengthening of the naira at the black market appears to have continued as the official window maintains stability with a 10.2% rise in dollar supply.

Normalcy appears to be returning to the forex market after the initial panic due to the CBN’s decision to stop allocating foreign exchange to Bureau De Change (BDC) operators.

Trading at the official I&E window

Naira remained stable against the US dollar at the Investors and Exporters window on Wednesday to close at N411.50/$1, this was the same rate when compared to N411.50/$1 recorded on Tuesday.

The opening indicative rate closed at N411.34/$1 on Wednesday, 4th August 2021, this represents a 16 kobo gain when compared to the N411.50/$1 that it closed at on Tuesday, 3rd August 2021.

An exchange rate of N413 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.50/$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 rose by 10.2% on Wednesday, 4th August 2021.

Forex turnover increased from $115.17 million recorded on Tuesday, 3rd August 2021 to $126.92 million on Wednesday, August 4, 2021.

Cryptocurrency watch

The world’s most popular and largest cryptocurrency, Bitcoin, rose by 3.67% on Wednesday to close at $39,839.12 putting an end to some days slump.

Bitcoin typically rallied in anticipation that demand would either remain steady or increase while the pace of issuance slowed.

The digital currency Ether climbed to its highest level in nearly two months in the midst of a software upgrade that will trim the pace at which fresh tokens are minted.

Ethereum, the second-biggest cryptocurrency after Bitcoin rose as much as 8.49% on Wednesday to trade around $2,723.99.

Ethereum, just like Bitcoin, is well off its record highs. It’s been trading within a 1,000-point range over the past 2 months, though the $1,700 level has acted as a floor during selloffs.

Crude oil price

Oil slumped for a third day in a row going below $69 per barrel after a surprise increase in U.S. crude inventories added to renewed concerns about demand recovery as China battles the coronavirus resurgence.

Brent crude dropped by 2.80% to close at $70.38 per barrel on Wednesday after the Energy Information Administration (EIA) reported an inventory build of 3.6 million barrels for the week to July 30.

This compared with analyst expectations of a 2.9-million-barrel draw. For the previous week, the EIA had estimated an inventory draw of 4.1 million barrels.

West Texas Intermediate futures had earlier on Wednesday dropped by 3.4% to close at the lowest in more than 2 weeks.

The API on Tuesday reported a smaller than expected draw in inventories, which also pressured prices.

On the other hand, however, reports of a tanker hijacking in the Gulf of Oman are adding upward pressure to prices as the reports again point to Iran as the culprit, increasing the uncertainty around the nuclear deal Tehran is negotiating with Western powers.

The WTI Crude traded at $68.03 per barrel on Wednesday, Natural gas recorded a 0.17% drop in price to trade at $4,151 after an initial rise earlier in the day. The Bonny Light was down by 0.77% to trade at $71.24 per barrel.

External reserve

Nigeria’s foreign reserve increased by $28 million on Tuesday, 3rd August 2021 to close at $33.512 billion compared to $33.484 billion recorded as of 2nd August 2021.

Since the reserve started moving positively, it has gained over $418.1 million in just 21 days despite enduring a significant plunge in the previous months.

Recall that the Central Bank of Nigeria banned the sale of foreign exchange to Bureau De Change (BDC) operators in the country, due to reports of the operators’ illegal trading of the dollar, trading beyond the limit threshold of $5,000 and gradually dollarizing the Nigerian economy, according to the CBN governor.

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