The U.S dollar was trading lower in the latter part of Asia’s trading session on Monday.

The slump was triggered on growing concerns about whether the safe-haven currency had found its footing after five straight months of declines, with low-interest rates expected to persist in the long term.

What we know: The U.S. Dollar Index, which tracks the greenback against a list of other major currencies, is down by 0.18% to trade at 92.787 at the time of this report.

The latest speech by Federal Reserve Chair, Jerome Powell, revealed an accommodative shift in the central bank’s approach to inflation, increasing pressure on the U.S dollar, as global investors interpreted it that U.S interest rates could stay lower for a longer period of time.

Quick fact: The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound sterling, Swedish Krona, Euro, etc. Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay more dollars in fulfilling such payment obligations.

Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note, gave insights on the prevailing macro, happening at the currency market, saying:

“The G-10 forex markets may give gold investors a more precise direction. The Fed’s message is that policy will remain accommodative, but there is no real appetite for adding to the easing. By contrast, the European Central Bank’s (ECB) rhetoric continues to leave the door more open to further action this year.

The ECB’s Pablo Hernandez de Cos noted Friday that the recovery pace had decelerated in August and that the need for additional stimulus cannot be ruled out.

“If more accommodation is on the way from the ECB, while the Fed stays status quo, and the EUR-USD weakens, gold’s US dollar unpinning could be seriously undercut.” He said.

Nigeria’s exchange rate at the NAFEX window remained stable for the fifth consecutive trading day to still close at N386/$1 during intraday trading on Thursday, September 18.

Also, the naira depreciated closing at N465/$1 at the parallel market as BDC operators expect another round of forex allocation. The drop could be attributed to increased demand and dollar scarcity as forex traders appear to hoard the foreign exchange.

Parallel Market: At the black market where forex is traded unofficially, the Naira depreciated against the dollar to close at N465/$1 on Friday, according to information from Abokifx, a prominent FX tracking website. This represents a N3 drop when compared with the N462/$1 that it exchanged on Thursday, September 17.

Currency Developments

• The local currency has strengthened by about 7.8% within the last one week at the black market, as the Central Bank of Nigeria introduced some measures targeted at exporters and importers in order to try to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders.
• The CBN has sold over $150 million to BDCs since the resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
• However, the exchange rate against the dollar has failed to sustain the initial gains made after the CBN announced plans to provide liquidity.
• BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders as it was inadequate to meet their expenses.
• We also noted that forex traders monitored during the previous week appear to hoard forex as they anticipated further depreciation in the market.
• There has been a sharp drop in speculative buying of foreign exchange, although demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.

NAFEX: The Naira still remained stable against the dollar at the Investors and Exporters (I&E) window on Friday, closing at N386/$1.

• This was exactly the same rate that it exchanged for on Thursday, September 17.
• The opening indicative rate was N386.37 to a dollar on Friday. This represents a 32 kobo drop when compared to the N386.05 to a dollar that was recorded on Thursday.
• The N392.62 to a dollar is the highest rate during intraday trading before closing at the rate of N386/$1. It also sold for as low as N383/$1 during intraday trading.

Forex Turnover: Forex turnover at the Investor and Exporters (I&E) window declined by 5.04% on Friday, September 18, 2020.

• According to the data tracked by Nairametrics from FMDQ, forex turnover dropped from $87.78 million on Thursday, September 17, 2020, to $83.35 million on Friday, September 18, 2020.
• The slightly higher forex supplies at the NAFEX window CBN’s move to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
• The drop in forex supply reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
• The average daily forex sale for last week was about $34.5 million which represents a drop from the $58.52 million that was recorded the previous week.
• Total forex trading at the NAFEX window in the month of August was about $857 million compared to $937 million in July.

It is a lot harder now to be a Bitcoin miner. Data from Glassnode, a crypto analytic firm, showed Bitcoin mining difficulty increased today by 11.3%, hitting a new all-time high.

#Bitcoin mining difficulty increased today by 11.3%, hitting a new all–time high!

It is the 3rd largest positive adjustment in the past two years.

Live chart: https://t.co/rAbIw8seYy pic.twitter.com/buzjPJJ0mP

— glassnode (@glassnode) September 20, 2020

Its recent all-time high is attributed to the 3rd largest positive adjustment in the past two years.

Quick fact: Bitcoin’s mining difficulty is best defined as the measure of how difficult it is to work for mining rewards or earning BTC.

READ: Ethereum Miners earn a staggering $1 million in 1 hour

Bitcoin mining involves the act of solving tasks that come in the form of algorithms in affirming a transaction and fixing it within a block on the blockchain.

BTC miners who successfully mine a block are paid or rewarded in BTC. BTC miners also help in facilitating the security mechanism of the blockchain network by confirming transaction information or data to the Bitcoin ledger.

This confirmation process involves solving complex mathematical problems and a lot of computing power. BTC Miners are successfully rewarded with BTC for their contribution to the ledger based on their proof-of-work.

Explore the Nairametrics Research Website for Economic and Financial Data

Meanwhile, BTC has performed well over the past few weeks, maintaining its position above $10k after testing this price level several times earlier in the year. It hasn’t dropped below $11k since the price started climbing in late July.

Despite these gains, it has continued to struggle to surpass the new psychological barrier of $11k. However, ongoing bullish sentiment, as evidenced by on-chain data, suggests that many investors would continue to support a price above this level.