Monday 8th March 2021: The exchange rate between the naira and the US Dollar closed at N411.88/$1 at the Investors and Exporters window
Naira depreciated yet again to a record low of N411.88/$1 on Monday 8th March 2021 at the NAFEX window, representing a 0.21% decline when compared to N411/$1 recorded on the previous trading day.
Also, Naira dipped against the US Dollar in the parallel market to close at N482/$1 on Monday, March 8th 2021. This represents a N2 depreciation when compared to N480/$1 recorded on Friday, 5th March 2021. Over the weekend the central bank announced a Naira4Dollar scheme where beneficiaries of diaspora remittances will be paid N5 for every $1 remitted via the banks.
Though still early days, traders appear to have ignored the likely effect of the policy as the scarcity of dollars on the streets of major cities in Lagos forced prices to weaken.
Trading at the official NAFEX window
The Naira depreciated against the US Dollar to a record low at the Investors and Exporters window on Monday to close at N411.88/$1. This represents an 88 kobo decline when compared to N411/$1 recorded on the previous trading day.
- The opening indicative rate closed at N411.64 to a dollar on Monday. This represents an 86 kobo gain when compared to N412.5/$1 recorded on Friday.
- Also, an exchange rate of N412 to a dollar was the highest rate during intra-day trading before it closed at N411.88/$1. It also sold for as low as N390/$1 during intra-day trading.
- Forex turnover at the Investor and Exporters (I&E) window dropped by 61.2% on Monday, 8th March 2021.
- According to the data tracked by Nairametrics from FMDQ, forex turnover decreased from $83.93 million recorded on Friday, March 5, 2021, to $32.58 million on Monday, March 8, 2021.
ABCON Reacts to Naira4Dollar
The members of The Association of Bureau De Change Operators of Nigeria (ABCON) have weighed in on the Naira4Dollar scheme of the CBN. Its President of ABCON, Alhaji Aminu Gwadabe said the policy will help improve forex liquidity.
Gwadabe said: “There is no doubt the incentive will be somehow attractive to the targeted beneficiaries of the remittances and therefore aimed to address concerns of one of the principal ally in the chain of remittances. This, therefore, suggests that it is a window, if well-articulated and includes all the principal allies in the remittances space, will help the Nigerian economy for the availability of FX liquidity,’’
The world’s largest cryptocurrency, Bitcoin gained 6% to trade at $53,299.514 as at 11.52 on Monday, 8th February 2021 compared to $50,044.64 recorded on the previous trading day.
- This is after a Chinese photo-editing app, popularly known as Meitu announced that it had bought $40 million worth of Ethereum and Bitcoin.
- Meanwhile, reports suggest that Nigeria has seen about a 15% surge of activity in peer-to-peer transactions since the Central Bank of Nigeria issued a circular reminding financial institutions in Nigeria about the prohibition in crypto-related transactions.
- Also, another report showed that Nigeria led Africa’s peer-to-peer transactions in the last 30 days, as it posted monthly P2P volumes of about $31 million, followed by the Kenyans and Ghana each posting about $12.1 million and $8.4 million respectively.
Oil prices lose grounds
Brent Crude oil on Monday dipped by 1.61% to close at $68.24 despite hitting the $70 per barrel earlier in the day.
- The decline came hours after Saudi Arabia’s Energy Ministry said that a drone hit a petroleum tank farm at Ras Tanura Port, one of the world’s largest oil shipping ports.
- The ministry also confirmed that shrapnel from a ballistic missile fell near Saudi Aramco’s residential area in Dhahran.
- Oil prices had soared past the $70 per barrel earlier on Monday, which is in line with the projected oil price of Goldman Sach for Q1 2021.
- WTI Crude closed at $64.81 (-0.37%), OPEC Basket $67.05 (+7.88%), Bonny Light $67.92 (+0.34%), and Natural Gas $2.659 (-0.19%).
External reserves persistent decline
Nigeria’s external reserve continued its decline as it dropped by 0.1% on Friday, 5th March 2021 to stand at $34.84 billion compared to $34.88 billion recorded as of March 4, 2021.
- This represents the lowest reserves position recorded in almost 3 months.
- Consequently, Nigeria’s external reserve has lost about $257.11 million in the month of March, on the back of the $1.2 billion lost in February 2021.
- The current reserves also represent a $531.2 million decline when compared to $35.37 billion recorded as of 31st December 2020.
- Worthy of note is the fact that Nigeria’s external reserve has continued to record declines since the month of January despite the increase in the price of crude oil in the global market.
- This might be attributed to the CBN forex market intervention aimed at managing the country’s exchange rate volatility.
- The CBN has however introduced a “Naira4Dollar” scheme in favour of diaspora Nigerians who are seeking to send in money into Nigeria. This is aimed at ensuring that remittance flows and diaspora investments become a significant source of external financing.