The U.S dollar closed high on Monday, hitting a six-week high, as currency traders and global investors rushed into the safe-haven currency.

This is coming on growing COVID-19 fears and worries over the U.S. Congress’ stimulus impasse drove a heavy sell-off in almost all other assets that include gold, Bitcoin, and Stocks.

What we now; At the time this report was drafted, Bitcoin traded at $10,463.98 with a daily trading volume of $23,554,819,012. BTC price is down -4.6% in the last 24 hours.

READ: U.S dollar drops lower, as U.S Federal Reserve plans on boosting inflation

Overnight on Wall Street, the Dow Jones Industrial Average fell 1.84%, the S&P 500 lost 1.16%, and the Nasdaq Composite dropped 0.13%.

Gold spot lost about 2.1% to trade at $1,909.05 per ounce on Monday, after falling as much as 3.4% earlier in the session, its lowest since Aug. 12. U.S. gold futures settled down 2.6% at 1,910.60.

Australia’s S&P/ASX 200 dropped 0.7% pressured by miners and energy stocks, while China’s blue-chip index shed 0.1% and Hong Kong’s Hang Seng index was down 0.5%. Japanese markets were closed for a public holiday

READ: U.S stock futures trade flat, Apple regains $2 trillion market value

However, at the time this report was drafted, U.S. Dollar Index, which tracks the greenback against a basket of other currencies, dropped some gains to trade at 93.608

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.

READ: FIRS generates N490 billion tax revenue in July, collects 89% from non-oil sector

Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics gave vital insights on the safe-haven currency, saying:

“The US dollar is stronger this morning on the back of a marked drop in risk appetite in European and US markets, but off overnight highs, as US stocks are rebounding in good order.

“Two factors explain much of the risk aversion. Banking shares are sharply lower following the International Consortium of Investigative Journalists report examining bank behavior in the context of Suspicious Activity Reports. Travel and leisure names are weaker in Europe on the back of continued angst around the rising COVID-19 case count in the Eurozone and the UK.

“The fickle nature of currency trading these days suggests that as US stocks fall, the USD rises, reflecting the USD’s dominance in demand when there are big down moves in risk sentiment.”

Nigeria’s exchange rate at the NAFEX window continued to remain stable for the sixth consecutive trading day to still close at N386/$1 during intraday trading on Monday, September 21.

Similarly, the naira remained stable closing at N465/$1 at the parallel market as BDC operators still await another round of forex allocation. This is as the Central Bank of Nigeria (CBN) investigates more companies over suspected forex abuse.

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Parallel Market: At the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N465/$1 on Monday, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it exchanged on Friday, September 18.

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.

READ: Finding Balance: GTB’s impeccable gains versus its notable losses

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

• This was exactly the same rate that it exchanged for on Friday, September 18.
• The opening indicative rate was N386.15 to a dollar on Monday. This represents a 22 kobo gain when compared to the N386.37 to a dollar that was recorded on Friday.
• 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.

READ: Naira falls at black market despite CBN’s sales of over $50 million to BDCs

Forex Turnover: Forex turnover at the Investor and Exporters (I&E) window declined by 18.2% on Monday, September 21, 2020.

• According to the data tracked by Nairametrics from FMDQ, forex turnover dropped from $83.35 million on Friday, September 18, 2020, to $68.14 million on Monday, September 21, 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.
• Meanwhile, according to media reports, the apex bank is currently investigating all the accounts of over 100 companies over alleged forex abuse, who specialize in buying foreign exchange from unauthorized sources without going through legitimate sources, thereby avoiding documentation and overheating exchange rates.

The exchange rate between the naira and the US dollar for today (Monday, September 21st 2020), closed at ₦455/US$1 in the parallel market. The rate had closed at ₦460/US$1 on Friday, September 18th 2020.

• Naira: ₦455
• Dollar: $1
• Date: September 21st, 2020

The exchange rate between the naira and the British pound sterling closed at ₦570/₤1 on Monday, 21st September, as against ₦595/₤1 recorded on Friday, September 18th 2020.

• Naira: ₦570
• Pounds Sterling: ₤1
• Date: September 21st, 2020

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The exchange rate between the naira and the European euro closed at ₦530/€1 on Monday, 21st September 2020. The exchange rate had closed at ₦540/€1 on Friday, September 18th 2020.

• Naira: ₦530
• Euro: €1
• Date: September 21st, 2020

Activity: US Dollar closed at ₦455/US$1 in the parallel market

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