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Currencies

Naira appreciates at black market as forex liquidity is boosted with huge dollar supply

At the black market where forex is traded unofficially, the Naira appreciated against the dollar to close at N462/$1 on Friday.

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forex, Naira appreciates at black market as forex liquidity is boosted with huge dollar supply

Forex turnover rose significantly by 194.2% as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N386/$1 during intra-day trading on Friday, October 30.

Also, the naira appreciated against the dollar, closing at N462/$1 at the parallel market on Friday, October 30, 2020, as businesses open up after relaxation of the curfew initially imposed to curtail the widespread violence that followed the hijacked #EndSARS protests and also the public holiday to mark Muslim festival.

READ: Naira stabilizes in forex markets as dollar supply hits record low during curfew

This is also as businesses shut down due to the outbreak of violence in Lagos and some parts of the country during the protests against the special anti-robbery unit (SARS) and police brutality by the Nigerian youths.

Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira appreciated against the dollar to close at N462/$1 on Friday. This represents a N3 gain when compared to the N465/$1 that it exchanged for on Wednesday, October 28.

READ: Naira stabilizes across forex markets as BDCs get over $450m allocation from CBN in 1 month

  • The local currency had strengthened by about 7.8% within the one week in September at the black market, as the CBN 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 $500 million to BDCs since they 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 remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.
  • The President of the Association of Bureau De Change Operators, Aminu Gwadebe, said he expects the impact of the extra liquidity in the market to be gradual.
  • Despite the drop in speculative buying of foreign exchange, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.

READ: Exchange rate is back to N470/$1 as external reserve continues its decline

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

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  • This represents a 33 kobo drop when compared to the N385.67/$1 that it exchanged for on Wednesday, October 28.
  • The opening indicative rate was N386.63 to a dollar on Friday. This represents a 74 kobo drop when compared to the N385.89 that was recorded on Wednesday.
  • The N393.44 to a dollar is the highest rate during intraday trading before it closed at N386 to a dollar. It also sold for as low as N383/$1 during intraday trading.

READ: Cutix Plc to pay its shareholders N220.1 million final dividend

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window rose sharply by 194.2% on Friday, October 30, 2020.

  • According to the data tracked by Nairametrics from FMDQ, forex turnover rose significantly from $73.01 million on Wednesday, October 28, 2020, to $214.78 million on Friday, October 30, 2020.
  • The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate their funds.
  • The huge increase in dollar supply after the previous trading day’s drop 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.
  • As part of the measure to check forex abuse and check illegal transactions, the CBN last month directed the freezing of accounts of about 38 companies.
  • The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
  • Total forex trading at the NAFEX window in the month of September was about $1.98 billion, compared to $843.97 million in August.
  • The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.

READ: Naira stabilizes across forex markets, as BDCs get another round of dollar allocation

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Currencies

Naira falls at NAFEX window as dollar supply drops significantly by 78%

Naira depreciated against the dollar to close at N410.67/$ on Monday, 10th May 2021, representing a 34 kobo drop from N410.33/$1 recorded on Friday, 7th May 2021.

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Monday, 10th May 2021: The exchange rate between the naira and the US dollar closed at N410.67/$1 at the Importers and Exporters window, where forex is traded officially.

Naira depreciated against the US dollar to close at N410.67 to a dollar on Monday, 10th May 2021, representing a 34 kobo drop when compared to N410.33/$1 that was recorded on Friday, 7th May 2021.

Meanwhile, the naira remained stable at the parallel market as it closed at N483/$1. This was the same rate that was recorded on Friday, May 7, 2021, as the dollar supply dropped significantly by 77.7%.

Trading at the official NAFEX window

The naira depreciated against the US dollar at the Investors and Exporters window on Monday to close at N410.67/$1, representing a 34 kobo drop when compared to the N410.33/$1 that was recorded on Friday.

  • The opening indicative rate closed at N410.22 to a dollar on Monday, 10th May 2021, representing a 12 kobo gain when compared to the N410.34/$1 recorded on Friday.
  • Also, an exchange rate of N422 to a dollar was the highest rate recorded during intra-day trading before it settled at N410.67/$1. It, however, sold for as low as N400/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window dropped significantly by 77.7% on Monday, 10th May 2021.
  • A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover declined massively from $146.52 million recorded on Friday, 7th May 2021 to $32.61 million on Monday, 8th May 2021.

Cryptocurrency watch

Bitcoin, the world’s most popular cryptocurrency, slumped by 5.29% as of Monday evening to trade at $55,682.55.

  • The world’s largest cryptocurrency continues to trade much lower than April’s high of $65,000, which came in anticipation of Coinbase’s direct listing on Nasdaq.
  • While Bitcoin has remained relatively stable, the altcoin market has flourished with the likes of Ethereum more than doubling in 16 days.
  • Recently, American multinational investment bank Morgan Stanley began offering BTC custody to clients. Goldman Sachs also recently announced that clients would be able to invest in Bitcoin.
  • Ethereum, the world’s second-largest cryptocurrency, surges above $4,000 for the first time ever as it traded at $4,213.46 before slumping to $3,897.09.

Crude oil price stalls

OPEC’s crude oil production is estimated to have increased to a 3-month high of 24.96 million barrels per day (BPD) in April.

  • Brent Crude dropped by 0.31% on Monday evening to close at $66.1 compared to its closing price of the previous day’s trading session.
  • The WTI dropped by 0.29% on Sunday to close at $64.73, Bonny light crude dropped by 0.16% to close at $66.71, while the OPEC basket dropped by 2.39% to close at $68.20.
  • Oil prices recorded a weekly gain against the backdrop of optimism over a global economic recovery, despite the Covid-19 crisis in India which is biting hard.
  • In China, data showed export growth accelerated unexpectedly in April while a private survey pointed to strong expansion in service sector activities.

External reserve

Nigeria’s external reserve plunged for the 14th consecutive day on Friday, 7th May 2021 as it dropped by about $18 million to close at $34.72 billion.

  • The nation’s foreign reserve declined from $34.74 billion recorded as of Thursday, 6th May 2021 to $34.72 billion on Friday, representing a 0.05% decline.
  • Nigeria’s foreign reserve has dipped $537.36 million since 16th April 2021 to date.
  • Nigeria will hope to boosts its foreign reserve position as oil prices continue to rally high and the CBN extends its naira 4 dollar initiative.

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Currencies

Naira appreciates across forex markets as dollar supply improves by 38%

The naira appreciated at the parallel market to close at N483/$1 on Friday, representing a N2 gain compared to N485/$1 recorded on Thursday.

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on

FOREX, Dollar scarcity worsens as exchange rate falls to N472/$1 at black market , Naira falls to N460/$1 as CBN intervention fails to contain speculation

Friday, 7th May 2021: The exchange rate between the naira and the US dollar closed at N410.33/$1 at the Importers and Exporters window, where forex is traded officially.

Naira appreciated against the US dollar to close at N410.33 to a dollar on Friday, 7th May 2021, representing a 67 kobo gain when compared to N411/$1 that was recorded on Thursday, 6th May 2021.

Also, the naira appreciated at the parallel market as it closed at N483/$1, representing a N2 gain when compared to N485/$1 that was recorded on Thursday, May 6, 2021, as forex market liquidity improved by 38%.

Trading at the official NAFEX window

The naira appreciated against the US dollar at the Investors and Exporters window on Friday to close at N410.33/$1, representing a 67 kobo gain when compared to the N411/$1 that was recorded on Thursday.

  • The opening indicative rate closed at N410.34 to a dollar on Friday, 7th May 2021, representing a 2 kobo gain when compared to the N410.37/$1 recorded on Thursday.
  • Also, an exchange rate of N437.41 to a dollar was the highest rate recorded during intra-day trading before it settled at N410.33/$1. It, however, sold for as low as N400/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window rose by 37.8% on Friday, 7th May 2021.
  • A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover increased from $106.34 million recorded on Thursday, 6th May 2021 to $146.52 million on Friday, 7th May 2021.

Cryptocurrency watch

Bitcoin, the world’s most popular cryptocurrency, slumped by 1.52% as of Sunday evening to trade at $57,951.21.

  • An amount of 12,354 bitcoins was recently withdrawn from Coinbase totalling over $700 million. The massive outflow could be related to institutional investors.
  • Large financial institutions have started offering bitcoin custody services to their clients.
  • Recently, American multinational investment bank Morgan Stanley began offering BTC custody to clients. Goldman Sachs also recently announced that clients would be able to invest in bitcoin.
  • Ethereum recorded a growth of 1.43% to close at $3,923.43, reaching an all-time high.
  • Meanwhile, payments giant Visa and financial services provider TALA have partnered to boost cryptocurrency adoption in emerging markets.
  • This partnership is aimed at easing the process of converting, storing and using cryptocurrencies by underbanked consumers.

Crude oil price stalls

Crude oil prices moved towards $70 as the oil markets remain optimistic with strong bullish sentiments as summer approaches.

  • Brent Crude rose by 0.28% on Sunday evening to close at $68.28 compared to its closing price of the previous day’s trading session.
  • The WTI rose by 0.29% on Sunday to close at $64.90, Bonny light crude dropped by 0.43% to close at $66.82, while the OPEC basket rose by 2.29% to close at $68.20.
  • Oil prices recorded a weekly gain against the backdrop of optimism over a global economic recovery, despite the Covid-19 crisis in India which is biting hard.
  • In China, data showed export growth accelerated unexpectedly in April while a private survey pointed to strong expansion in service sector activity.

External reserve

Nigeria’s external reserve plunged for the 13th consecutive day on Thursday, 6th May 2021 as it dropped by about $22 million to close at $34.74 billion.

  • The nation’s foreign reserve declined from $34.76 billion recorded as of Wednesday, 5th May 2021 to $34.74 billion on Thursday, representing a 0.63% decline.
  • Nigeria’s foreign reserve has dipped $519.36 million since 16th April 2021 to date.
  • Nigeria will hope to boosts its foreign reserve position as oil prices continue to rally high and the CBN extends its naira 4 dollar initiative.

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