The exchange rate between the Naira and the US Dollar weakened at the NAFEX (I&E Window) to close at N398.5/$1 on Monday, 8th February 2021.
This represents a decline of 0.6% compared to the closing rate of N396.17/$1 recorded on Friday, 5th February 2021. However, the exchange rate at the black market remained unchanged at N480/$1. This is despite the latest clampdown against cryptocurrencies by the central bank.
Trading at the official NAFEX window
The Naira fell against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N398.5/$1, indicating a decline of N2.33 compared to N396.5/$1 recorded last week Friday.
- The opening indicative rate was N397.5 to a dollar on Monday, the same as recorded on Friday, 5th February 2021.
- The N402 to a dollar was the highest rate during intra-day trading before it closed at N398.5 to a dollar. It also sold for as low as N385/$1 during intra-day trading.
- Forex turnover declined by 40.3% at the Investor and Exporters (I&E) window to stand at $57.78 million.
- A cursory look at the data obtained from FMDQ showed that forex turnover declined from $96.82 million recorded on Friday, 5th February 2021 to $57.78 million.
- It however increased by 21.1% compared to $47 million recorded last week Thursday, 4th February 2021.
The backlash against the central bank’s ban on cryptocurrency trades continued on Monday as several Nigerians took to social media, TV, and radio to express their frustrations.
However, local crypto exchanges adopted a cautious approach avoiding any backlash with who could be their potential regulator.
While Nigerians continued to express outrage, the world’s richest man, Elon Musk announced his company Tesla had purchased up to $1.5 billion in Bitcoins sending the cryptocurrency value up 10% to about $44,000.
Oil price hits $60
The value of Brent Crude also surpassed the $60 per barrel market today after closing at $60.42 per barrel. This represents the highest recorded in over a year after enduring a significant crash in 2020.
- Brent Crude oil gained 1.08% in Monday’s trading to stand at $60.42 per barrel.
- This gain came on the back of OPEC and its allies pledge to continue to cut down on global crude oil inventories while crude stockpiles in the United States fell to their lowest levels since March last year.
- The rise in crude oil prices could also be attributed to the expectations that the production curbs by OPEC+ would tighten the market in the first quarter of 2021.
- The rise in the value of global crude oil price will come as good news to Nigeria as it tops the 2021 budget benchmark of $40 per barrel. It will also serve as a boost for Nigeria’s external reserve and its foreign exchange rate.
Higher oil prices boost Nigeria External reserves
Nigeria’s external reserve dropped by 0.12% to $36.1 billion as of February 4th 2021, representing the eighth successive decline recorded since 25th January 2021.
- However, it is still a significant improvement when compared to $35.37 billion recorded as of December 31st 2021.
- Nigeria also needs the external reserves to hit $40 billion if it is to adequately meet some of the pent up demand that has piled up since 2020 when oil prices crashed and the pandemic caused major economic lockdowns.