Naira remains stable across forex markets as external reserve plunges to 14 months low

The exchange rate between the naira and the US dollar closed at N411.67/$1 at the Investors and Exporters window, where Forex is traded officially.

Naira remained stable against the US dollar on Friday to close at N411.67 to a dollar, the same as recorded on the previous day. It however represents a 0.16% depreciation for the week compared to N411/$1 recorded on Friday, 18th June 2021.

Also, the exchange rate remained flat at the parallel market to close at N500/$1 on Friday, 25th June 2021, the same as recorded on Thursday. Nigeria’s external reserve, however, plunged $45.33 million on Thursday, 24th June 2021, bringing its month-to-date loss to $681.9 million.

Trading at the official NAFEX window

Naira remained stable against the US dollar at the Investors and Exporters window on Friday to close at N411.67/$1.

The opening indicative rate depreciated by 13 kobo to close at N411.55 to a dollar on Friday, 25th June 2021, as against N411.42/$1 recorded on Thursday, 24th June 2021.

An exchange rate of N412.56 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.67/$1, while it also sold for as low as 400/$1 during intra-day trading.

Forex turnover at the Investors and Exporters (I&E) window rose slightly by 4.6% on Friday, 25th June 2021.

Data tracked by Nairametrics from FMDQ revealed that forex turnover increased from $109.47 million recorded on Thursday, 24th June 2021 to $114.53 million on Friday.

Cryptocurrency watch

The cryptocurrency market recorded a partial gain on Sunday as the total market capitalisation gained marginally by 0.24% to close at $1.28 trillion.

The most popular digital asset also gained 1.03% to close at $32,602.14, while Ethereum recorded a decline of 0.35% to close at $1,824.71.

Last week, South African brothers, Raees and Ameer Cajee, who ran Africrypt, a cryptocurrency investment firm, vanished with more than $3.6 billion worth of Bitcoin.

China also issued crypto mining bans in prominent regions in the country, while the People’s Bank of China called for a prompt check and disablement of client accounts engaging in cryptocurrency transactions.

Meanwhile, New Oxford Science Academy, a private secondary school in Kano State, announced that it will be accepting cryptocurrency as a means of payment for tuition fees. This is despite the CBN banning financial institutions from providing cryptocurrency-related services.

Crude oil price

Crude oil prices extended their bullish run as Brent crude, WTI, Bonny Light, Opec Basket amongst others all posted positive growth in price.

Brent Crude closed at $76.18 per barrel while WTI Crude closed at $74.05 per barrel, representing a gain of 0.75%.

The higher prices can be largely attributed to declining US oil inventories, an increase in oil demand, and a statement by the U.S government contradicting Iran’s earlier statement that the US had agreed to lift all sanctions related to Iranian crude oil.

The bullish trend in the crude oil market may also be attributed to the rapid deployment of effective vaccines in Europe, America, as well as strict quarantine controls in China and other parts of Asia.

Oil prices have continued to rally despite the possibility of OPEC easing its production quotas.

External reserve

Nigeria’s external reserve plunged further on Thursday, 24th June 2021, by $45.33 million to close at $33.55 billion. This represents a 0.13% decline compared to $33.59 billion recorded the previous day.

Nigeria’s foreign reserve fell to its lowest position in over 14 months, as its year-to-date decline hit $1.83 billion, while its month-to-date decline stands at $681.9 million.

The decline may be attributed to reduced forex earnings, especially from crude oil export due to the cut in production quota. This is despite the recent bullish trend in the global crude oil market. Oil is currently trading at over $76 per barrel.

The government will look to devise a means to improve forex liquidity as the “Naira 4 Dollar” by the CBN is yet to reflect on the countries forex reserve level.

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