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U.S dollar drops, Currency traders fear increasing COVID-19 caseloads

The U.S. Dollar Index, which monitors the greenback’s strength against a basket of major currencies dropped 0.14% to trade at 92.263 points.



parallel market, greenback, U.S dollar rises against major currencies, U.S and China’s economic data support the dollar, U.S dollar gains ground, U.S. President Trump boosts investors’ Optimism, Exchange rate stabilizes across forex markets as CBN moves against abuse by dealers

The U.S dollar suffered significant losses at the first trading session of the week. Currency traders are having their hopes dashed as a result of the increasing COVID-19 caseloads going out of control specifically in emerged markets amid promising potential COVID-19 vaccines already in the pipeline.

  • At the time of writing this report, the U.S. Dollar Index, which monitors the greenback’s strength against a basket of major currencies dropped 0.14% to trade at 92.263 points.

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

What this means

Currency traders seem to be highly concerned about reports that millions of Americans are anticipated to flout warnings to stay indoors amid the upcoming Thanksgiving holiday, raising fears such significant movement of humans could trigger the number of COVID-19 cases that are already going out of control.

In addition, Western Europe does not look immune too, taking into consideration that Europe’s largest economy Germany, could see its current restrictions on human mobility extended until mid-December.

READ: Afreximbank posts $217m net income in 9M 2020

What you should know

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 in Europe or Japan, would need to pay more dollars in fulfilling such payment obligations.


READ: Billionaires that can triple the value of Bitcoin

What they are saying

In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, gave key insights into the macro that is playing out at the currency market.

“With just over a month to go until Christmas now, attention will remain on the Covid-19 pandemic as governments worldwide continue to impose tough restrictions on their citizens to contain the spread of the virus.

READ: Trump International Hotel sale stalled

“Economic data will likely get worse before it gets better. The impact of continued lockdowns will be felt for some time before vaccines become widely available.”

Bottom Line

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The currency market is having a tug of war right now establishing whether it can look through nearer-term negative data and news.

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Message Olumide on Twitter @tokunboadesina. He is a Member of the Chartered Financial Analyst Society.

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“Don’t deposit more than $5k monthly,” banks inform customers

Reports reaching Nairametrics indicate some commercial banks have started sending new transfer limits to their customers.



The US dollar remains king, U.S dollar gains against major currencies, America threatens China with sanctions., U.S dollar slumps against major currencies, investors become optimistic about global demand, U.S Dollar Stands Firm, Foreign Exchange Traders Remain Neutral 

Reports reaching Nairametrics indicate some commercial banks have started sending new transfer limits to their customers.

Emails sent to some customers that were shared with Nairametrics reveal banks are informing customers that they can only deposit $5,000 in cash into their accounts monthly. They also advised the customers to transfer electronically instead of cash deposits. One of the banks also indicated that cash deposits are no longer allowed for some account holders.

“There is a $5,000 monthly cash deposit limit. We encourage you to make more deposits via electronic transfers. Cash funded transfers to beneficiaries with accounts in other banks in Nigeria are no longer allowed. There will be no restriction to the frequency or value of transactions for accounts funded through inflows but supporting documents are required before payments are processed. Cash deposits are no longer allowed for Wealth Management Investments.”

Some of these rules are actually not new as they contain forex transaction guidelines issued by the central bank last year as part of its efforts to curtail demand for forex and reduce the utilization of the banking system to facilitate black market dealing in forex.

What this Bank Transfer Limit means

  • You cannot deposit more than $5,000 cash monthly (cumulative) into your bank domiciliary accounts.
  • However, you can deposit more than this if it is an electronic transfer. This is a lot more difficult to achieve for retail buyers of forex and the exchange rate is often higher.
  • You are also required to provide supporting documents backing the inflow of dollars into your account especially if the transfers are from one personal account to another.

Last week, the CBN announced it was indefinitely extending its Naira 4-dollar scheme for diaspora remittances which was introduced in March, suggesting the program may have achieved success by its standards.

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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.



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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