Naira continues to depreciate at forex market despite significant surge in dollar supply

Monday, 23rd August 2021: The exchange rate between the naira and the US dollar closed at N411.83/$1 at the official Investors and Exporters window.

Naira depreciated against the US dollar on Monday to close at N411.83/$1, representing a 0.04% depreciation compared to N411.67/$1 recorded at the close of trading on Friday, 20th August 2021.

Meanwhile, the naira maintained stability at the parallel market to close at N520/$1 on Monday, having depreciated by 0.97% in the previous day from N515/$1.

Nigeria’s foreign reserve also depleted further to close at $33.5 billion on Friday, 20th August 2021, which is a 0.05% decline compared to $33.52 billion recorded as of the previous day.

Trading at the official NAFEX window

Naira depreciated against the US dollar at the Investors and Exporters window on Monday to close at N411.83 to a dollar.

The opening indicative rate closed at N411.27/$1, an uptick compared to N411.71/$1 recorded in the previous day.

An exchange rate of N413 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.83/$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 increased significantly by 203.6% on Monday, 23rd August 2021.

Forex turnover surged from $57.19 million recorded on Friday, 20th August 2021 to $173.64 million on Monday, 23rd August 2021.

Cryptocurrency watch

While the oil market is currently on the green, the crypto market is currently trading bearishly as crypto investors have lost about $10.6 billion so far on Tuesday.

The world’s most popular crypto asset declined by 0.41% in price to trade at $49,372.42. The same was recorded in XRP, as the digital asset recorded a 0.76% decline to trade at $1.238. Meanwhile, Ethereum continues to oscillate between negative and positive trade so far in the day.

According to reports from Financial Times, crypto exchanges are currently booming, as its rate of growth and juicy profits are likely to attract greater competition and more regulatory scrutiny.

Crude oil price on a positive rally

The crude oil market resumed the week on a positive note and has consolidated on Monday’s gains. As of 12:37 pm on Tuesday, Brent Crude oil had gained 1.79% to trade at $69.98 per barrel. Worth noting that it had surpassed the $70 per barrel threshold earlier in the day.

Also, WTI Crude recorded a 1.66% increase in price to trade at $66.73, while natural gas gained 0.46% to trade at $3.963 on Tuesday. Meanwhile, Bonny Light had also gained 3.93% to trade at $67.25 per barrel.

A weaker U.S. dollar and China bringing local COVID cases back to zero after a month of drastic restrictions on movement encouraged crude oil buying in the market, which had settled in the reds on Friday for the seventh day in a row.

External reserve

Nigeria’s foreign reserve declined further on Friday, 20th August 2021 by $18.39 million to close at $33.5 billion compared to $33.53 billion recorded as of Thursday, 19th August 2021.

Meanwhile, the external reserve level has gained about $94.63 million month-to-date.

However, an account of its year-to-date movement shows a decline of $1.88 billion compared to $35.37 billion recorded as of December 31st, 2021. It is worth noting that Nigeria’s reserve has decreased continuously for the past 8 days, which represents about $91.84 million loss.

Meanwhile, a recent EFG Hermes report suggested that Nigeria’s foreign reserve position could grow as high as $40 billion by the end of September.

This was made known following the $3.35 billion direct allocations to Nigeria, approved by the International Monetary Fund (IMF). The funds are expected to boost the country’s FX position, while an additional planned minimum $3 billion Eurobond issuance could also see a 20% boost in the country’s reserve.

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