Currencies
Official: CBN says N360/$1 not devaluation but “adjustment of price”
Governor, Godwin Emefiele clarifies the supposed devaluation of Naira. Says it is an adjustment of price and not a devaluation of the currency.
Nigeria’s central bank officially commented on the widely perceived devaluation of the naira from N307/$1 to N360/$1 at the official window. The CBN on its twitter handle said the currency was not a devaluation but an “adjustment of price.
“Governor, Godwin Emefiele clarifies supposed devaluation of Naira. Says it is an adjustment of price and not a devaluation of the currency.”
#FOREX #CBN Governor, Godwin Emefiele clarifies supposed devaluation of Naira. Says it is an adjustment of price and not a devaluation of the currency
— Central Bank of Nigeria (@cenbank) March 21, 2020
Nairametrics reported earlier today that the Central Bank of Nigeria had devalued its official exchange rate from N307/$1 to N360/$1. The apex bank has now reflected this change on its website signaling a confirmation. The bank is yet to issue a press release to this effect.
The CBN has now officially devalued by 15% moving from N307/$1 to N360/$1. Depreciation at the “market-determined” I&E window is 5% having moved from N360/$1 to N380/$1. Nairametrics also got hold of a letter from the CBN to banks informing them of the new exchange rate for dollars flowing from the International Money Transfer Operators (IMTOs). According to the CBN, IMTOs will sell to banks at N376/$1 while banks will sell to the CBN at N377/$1. The CBN will sell to BDC’s at N378/$1 while the BDC’s will sell to end-users at “no more than” N380/$1.
Reactions: Initial reactions to the CBN’s tweet drew some condemnation from some twitter users.
Call it whatever name. It needs to happen and it has happened.
— Victor Adegite (@VAdegite) March 21, 2020
Devaluation is an official lowering of the value of a country's currency within a fixed exchange-rate system, in which a monetary authority formally sets a lower exchange rate of the national currency in relation to a foreign reference currency or currency basket.
CBN did this
— Kehinde Oyelade (@KehindeOyelade2) March 21, 2020
This is totally unnecessary @cenbank . Why play with words/semantics?
The reality remains the same
— The Revolutionary Seeker (WAEC) (@The_Seeker76) March 21, 2020
READ MORE: CBN announces initial policy response to COVID-19
Most analysts believe the central bank under Godwin Emefiele hates to use the term devaluation whenever there is an adjustment in the currency. In June 2016, Godwin Emefiele announced Nigeria was moving to a “flexible exchange rate” policy a move that increased speculation and worsened the currency situation. Similarly, in 2017 the CBN introduced the Investor and Exporter window allowing the exchange rate to trade at between N360/$1 and N366/$1 while it retained N305/$1 as its official rate. It also created other exchange rate windows.
Currencies
Exchange rate remains stable at NAFEX window as bitcoin drops below $50k
The exchange rate between Naira and Dollar closed at N410/$1 at the NAFEX window as bitcoin plunged below $50k.
Thursday, 22nd April 2021: The exchange rate between the naira and the US dollar closed at N410/$1 in the Importers and Exporters window.
Naira remained stable on Thursday, at the Nigerian Autonomous Foreign Exchange (NAFEX) window, as the rate closed at N410 to a dollar, the same as recorded on Wednesday, 21st April 2021.
Meanwhile, the naira gained marginally in the parallel market to close at N485/$1 on Thursday. The rate appreciated by 0.21% compared to N486/$1 recorded a day before.
The price of the world’s most popular digital instrument dropped on Friday, 23rd April 2021, while Nigeria’s external reserve continues to record a decline.
READ: CBN Governor says Nigeria’s external reserves sufficient to cover 7-months import
Trading at the official NAFEX window
The naira remained stable against the US dollar at the Investors and Exporters window on Thursday to close at N410/$1, the same as recorded on Wednesday.
- The opening indicative rate closed at N409.68 to a dollar on Thursday, 22nd April 2021. This is a 14 kobo depreciation, compared to N409.54/$1 recorded on Wednesday.
- Also, an exchange rate of N436.4 to a dollar was the highest rate recorded during intra-day trading before it settled at N410/$1. It also sold for as low as N394/$1 during intra-day trading.
- Forex turnover at the Investor and Exporters (I&E) window surged by 169.2% on Thursday, 22nd April 2021.
- Data tracked by Nairametrics from FMDQ showed that forex turnover increased from $40.13 million recorded on Wednesday, 21st April 2021, to $108.04 million on Thursday.
READ: Naira gains at black market as external reserves increases by $620 million in 2 weeks
Cryptocurrency watch
The world’s most priced digital asset plunged 3.68% on Friday morning to trade at $49,710
- It dipped below $50k, as of 4:20 am on Friday, 23rd April 2021 as sell-offs by investors put pressure on the most sought-after cryptocurrency in the world.
- Bitcoin has experienced a massive drop over the past few weeks, having enjoyed a significant rise earlier in the year.
- According to a report, the decline signals an imminent reversal from its initial gains witnessed in 2020 and earlier in 2021.
- Historically, Bitcoin has not stayed down for very long, and it has been known to be quite volatile and swing quickly and unexpectedly. Hence, it is hoped that the digital instrument will spring back up, in coming trading sessions.
Crude oil price
The price of crude oil recorded positive growth in the early hours of Friday, 23rd April 2021.
- Brent Crude increased by 0.32% to trade at $65.61, indicating a growth of $0.21, compared to $65.83 recorded at the end of trade on Thursday
- WTI Crude increased by 0.5% to trade at $65.61, while Natural Gas currently sells for an average of $2.752.
- Meanwhile, Libya’s crude oil production has fallen significantly after a company said it would have to reduce output by 100,000 barrels per day.
- Recall that, Nairametrics had reported that Libya’s National Corporation declared force majeure on exports from the port of Hariga due to lack of maintenance funds, consequently shutting down several fields and bringing the country’s production to less than 1 million barrels per day.
External reserve
Nigeria’s external reserve position, reduced by 0.09% on Wednesday 21st April 2021 to stand at $35.15 billion.
- Data obtained from the Central Bank of Nigeria (CBN), revealed that Nigeria’s external reserve dipped from $35.218 billion recorded on 20th April 2021 to $35.15 billion on Wednesday, April 21, 2021.
- This represents the third consecutive decline recorded in the week, having had 19 successive growths in Nigeria’s external reserve.
- The growth recorded was attributed to increasing global oil prices and the movement by the Apex bank to improve dollar inflow into the county.
Currencies
Exchange rate gains at NAFEX window despite decline in forex supply
Nigeria’s exchange rate appreciated against the US dollar on Wednesday to close at N410/$1.
Wednesday, 21st April 2021: The exchange rate between the naira and the US dollar closed at N410 to a dollar at the Importers and Exporters window, where forex is traded officially.
Nigeria’s exchange rate appreciated against the US dollar on Wednesday to close at N410/$1. This represents a 0.16% gain compared to N410.67/$1 recorded on Tuesday, 20th April 2021.
The naira remained stable at the parallel market, closing at N486/$1 on Wednesday, 21st April 2021 after it depreciated by 0.83% in the previous trading session.
Trading at the official NAFEX window
The naira appreciated against the US dollar at the Investors and Exporters window on Wednesday to close at N410/$1. This represents a 67 kobo gain when compared to N410.67/$1 recorded on Tuesday, 20th April 2021.
- The opening indicative rate closed at N409.54 to a dollar on Wednesday. This is 4 kobo depreciation, compared to N409.5/$1 recorded on Tuesday.
- Also, an exchange rate of N422 to a dollar was the highest rate recorded during intra-day trading before it settled at N410/$1. It also sold for as low as N394/$1 during intra-day trading.
- Forex turnover at the Investor and Exporters (I&E) window dipped by 59.7% on Wednesday, 21st April 2021.
- Data tracked by Nairametrics from FMDQ showed that forex turnover decreased from $99.49 million recorded on Tuesday, 20th April 2021, to $40.13 million on Wednesday.
READ: Naira gains at NAFEX window despite 26.2% drop in dollar supply
Cryptocurrency watch
Bitcoin dipped by 3.96% to close at $54,267.91 on Wednesday, 21st April 2021.
- The world’s most sought-after digital asset lost $2,235.28 in Wednesday’s trading session as the total Cryptocurrency market capitalisation dipped by 2.98% to close at $1.97 trillion.
- Since the directive by the CBN to place a ban on crypto transactions in the country earlier in the year, usage of Bitcoin’s peer-to-peer trading in Nigeria has surged by 27%.
- Notably, in the past 85 days, Nigerians have moved about $103 million worth of Bitcoins on just Paxful and LocalBitcoins channels alone.
Crude oil price slumps
The price of Brent crude oil dipped by 1.88% to close at $65.32 on Wednesday, 21st April 2021.
- The decline in the price of crude was attributed to concerns that surging COVID-19 cases in India will drive down fuel demand in the world’s third-biggest oil importer.
- Meanwhile, data from the American Petroleum Institute revealed that U.S. crude oil stocks rose by 436,000 barrels in the week ended 16th April 2021.
- However, Libya’s National Oil Corporation declared force majeure on exports from the port of Hariga due to lack of maintenance funds, consequently shutting down several fields and bringing the country’s production to less than 1 million barrels per day.
- Brent Crude closed at $65.32 (-1.88%), WTI Crude closed at $61.17 indicating a 0.29% decline, while natural gas also grew by 0.26% to close at $2.699.
READ: Naira remains stable across forex market as dollar supply improves significantly by 430%
External reserve
Nigeria’s external reserve declined by 0.1% on Tuesday, 20th April 2021 to stand at $35.18 billion.
- According to data obtained from the Central Bank of Nigeria (CBN), Nigeria’s external reserve dipped further on Wednesday from $35.22 billion recorded as of 19th April 2021 to $35.18 billion on Tuesday.
- The second consecutive decline comes on the back of 19 successive growth recorded in Nigeria’s external reserve position.
- Meanwhile, the Central Bank of Nigeria has moved to improve dollar inflow into the country by assuring exporters that they will continue to have unrestrained access to their export proceeds.
- Governor Emefiele however, tasked exporters on repatriation of their export proceeds to improve foreign exchange inflows into Nigeria.
4 Comments