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Currencies

Naira gains at NAFEX window despite low dollar supply

The Naira appreciated against the US Dollar on Monday to close at N408.90/$1 at NAFEX window

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Dollar, Exchange rate, FOREX, NAFEX market turnover drop by 59%, Naira crashes to N470/$1 as currency uncertainty worsens 

Monday 15th March 2021: The exchange rate between the naira and the US Dollar closed at N408.90 to a dollar at the Investors and Exporters window.

The Naira appreciated against the US Dollar on Monday to close at N408.90/$1, representing a 0.27% gain when compared to N410/$1 recorded on Friday, 12th March 2021 despite drop in dollar supply

Also, the Naira remained stable against the US Dollar in the parallel market, to close at N485 to a dollar. the same as the rate that was recorded on the previous day.

This is coming after the Association of Bureau De Change Operators in Nigeria (ABCON) said that BDCs will collaborate with the CBN to defend the naira

READ: Naira gains against the dollar at I&E window, forex liquidity up by 242%  

Trading at the official NAFEX window

Naira appreciated against the US Dollar at the Investors and Exporters window on Monday to close at N408.90 to a dollar. This represents a N1.10 gain when compared to N410/$1 recorded on the previous trading day.

  • The opening indicative rate closed at N410.95 to a dollar on Monday. This represents a N1.82 drop when compared to N409.13/$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 N408.90/$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 20.68% on Friday, 12th March 2021.
  • A look at the data tracked by Nairametrics from FMDQ, forex turnover declined from $63.88 million recorded on Friday, March 12, 2021, to $50.67 million on Monday, March 15, 2021

READ: Naira gains at NAFEX window as external reserve plunges $1.1 billion in less than a month

Cryptocurrency watch

Bitcoin, the world’s most popular and largest cryptocurrency dropped by as much as 9.2% before trading at $56,131, after topping out of $61,742 on Saturday.

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  • Bitcoin reached its latest all-time high on optimism that some of the pandemic relief payments in the U.S. will end up chasing the digital token’s towering rally.
  • The new mark for the world’s most popular crypto comes after a relatively fallow period for the asset whose gains have been attributed to greater adoption by a clutch of prominent institutional investors.

READ: The Nigerian economy is increasingly dollarized but there is a way-out

Oil prices record decline

Brent Crude oil on Monday 15th March 2021 dropped by 1.8% to close at $68.47, as it continued to recover from its slump last year.

Stanbic 728 x 90
  • Despite optimism from Chinese data overnight, forecasts for lower OPEC+ output, and a weaker dollar, oil prices are dropping.
  • Oil declined for a second day as the market’s underlying structure weakened and the dollar strengthened.
  • There have been some suggestions that the drop is due to investors also considering the potential impact of higher taxes and how that could affect corporate profit growth. President Joe Biden is planning the first major federal tax hike since 1993 to help pay for a long-term economic program, according to people familiar with the matter.
  • Oil traders assessed prospects for further recovery from the pandemic and the outlook for rising global demand as the OPEC+ alliance presses on with output curbs to drain inventories.
  • WTI Crude closed at $64.89 (-0.76%), OPEC Basket $68.14 (+1.11), Bonny Light $67.51 (-1.26%), and Natural Gas $2,492 (+0.32%).

External reserve continues its decline

Nigeria’s external reserve declined by 0.12% on Friday, 12th March 2021 to stand at $34.59 billion being a record low in 10 months.

  • The country’s external reserve declined from $34.63 billion recorded as of Thursday, 11h March 2021 to stand at $34.59 billion as of 12th March 2021.
  • Nigeria’s current external reserve position indicates a total drop of about $410 million in the month of March 2021.

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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

U.S dollar under pressure amid rising inflation

At press time, the U.S. dollar index, which tracks the U.S dollar strength against major currencies dropped by 0.12% to trade at 90.945 points.

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Possibilities of a second wave of COVID-19 infections Limits U.S dollar gains

The greenback dropped significantly against its rivals on Tuesday as currency analysts anticipated more selling pressure on the U.S dollar despite concerns that the U.S Federal Reserve might raise rates sooner than expected.

At the time of writing this report, the U.S. dollar index, which tracks the U.S dollar strength against major currencies dropped by 0.12% to trade at 90.945 points.

Currency traders and analyst anticipate the second coming of dollar strength, might not last long with inflation picking up at record levels coupled with an unlikely aggressive approach towards tightening monetary liquidity from the U.S Apex Bank.

READ: Crypto Armageddon: Over $200 billion wiped off in the Crypto market 

The U.S. Dollar Index tracks the American dollar against a basket of other major currencies (like the Japanese yen, British pound sterling, Swedish Krona, and Euro). Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay more dollars in meeting such obligations.

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics gave valuable insights on the macros weighing on the dollar in the near term.

“It looks very much like a textbook case of US dollar weakness as the pieces are slowly falling into place for a dollar selling trend to resume.

“A deteriorating US trade deficit, a retracement in Fed. pricing, a significant upturn in European vaccination rates and upcoming growth acceleration support the view.”

What to expect

The currency market is now turning more consensus by the day that the next recovery spurt should be relatively short-lived and are now deferring to the Fed’s “broad-based and inclusive” labour market progress to satisfy its maximum employment objective.

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Currencies

Naira gains at NAFEX window as oil prices make rebound

Naira gained against the US dollar on Monday 19th April 2021 to close at N410.33/$1 as crude oil prices gained.

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Naira falls across forex markets as businesses resume after public holidays

Monday, 19th April 2021: The exchange rate between the naira and the US dollar closed at N410.33 to a dollar at the Importers and Exporters window.

Naira gained against the US dollar on Monday, 19th April 2021 to close at N410.33 to a dollar. This represents a 0.16% appreciation compared to N411/$1 recorded on Friday, 16th April 2021.

On the other hand, the naira remained stable at the parallel market, as it closed at N482/$1 on Monday, 19th April 2021. Dollar supply at the NAFEX window increased from $61.52 million to stand at $69.71 million, representing an increase of 13.3%.

Notably, crude oil posted positive growth on Monday as Brent crude grew by 0.54%, and Bonny Light gained 0.37%.

Trading at the official NAFEX window

The naira gained against the US Dollar at the Investors and Exporters window on Monday to close at N410.33/$1. This represents a 67 kobo gain when compared to N411/$1 recorded on Friday, 16th April 2021.

  • The opening indicative rate closed at N409 to a dollar on Monday. This represents a N1.13 kobo gain, compared to N410.13/$1 recorded the previous day.
  • Also, an exchange rate of N437.41 to a dollar was the highest rate recorded during intra-day trading before it closed at N410.33/$1. It also sold for as low as N399/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window improved by 13.3% on Monday, 19th April 2021.
  • A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover increased from $61.52 million recorded on Friday, April 16th, 2021, to $69.71 million on Monday.

Cryptocurrency watch

Bitcoin continues to record a significant downturn after hitting a record high last week. The world’s most popular and sought-after digital asset, declined by 2.77% in the early hours of Tuesday to trade at $53,301.12.

  • Recall that the asset had dropped by 15% on Saturday and 6.1% in the hours of Monday, 19th April 2021.
  • As of 4:03 am on Tuesday, Bitcoin was trading at $53,301.12, representing $1,359 lesser than the close of trade on Sunday.
  • The entire crypto market capitalisation also slumped to $1.9 trillion, from over $2 trillion market capitalisation recorded a day before.

Crude oil gains on the back of a weak dollar

Oil prices gained marginally on, 19th April 2021 to close at $67.13 per barrel, indicating a 0.54% growth when compared to $66.77 recorded on Sunday.

  • The increase was attributed to a weaker US Dollar on Monday, as prices of major crude oil products recorded marginal growth across board.
  • The weaker U.S. dollar supported oil prices on Monday as it makes oil cheaper to buy for holders of other currencies. The gains were however limited due to the third wave of the covid-19 pandemic in India.
  • Brent Crude closed at $67.13 (+0.54%), WTI Crude closed at $63.48 indicating 0.54% gain, Bonny Light, $65.25 (+0.24%), OPEC Basket (+0.73%) to close at $65.21 while Natural gas also grew by 2.16% to close at $2.738.

External reserve

Nigeria’s external reserve increased by 0.08% on Friday, 16th April 2021 to stand at $35.25 billion.

  • This represents the 19th consecutive increase in Nigeria’s external reserve position, which has gained about $838.3 million since 18th March 2021, about a month ago.
  • Nigeria’s external reserve has received a consistent boost in recent times on the back of the increase in the price of crude oil and the CBN’s policy to pay Nigerians for any unit of dollar received from the diaspora.
  • Nigeria will hope for this increase to continue, as it will help the country to meet its accumulated obligations that have been hampered by the advent of the pandemic in the country.

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