Connect with us
deals book
Advertisement
Oando
Advertisement
Alpha
Advertisement
Hotflex
Advertisement
Binance
Advertisement
Advertisement
UBA
Advertisement
Patricia
Advertisement
Access bank
Advertisement
app

Currencies

Exchange rate gains at NAFEX window despite decline in forex supply

Nigeria’s exchange rate appreciated against the US dollar on Wednesday to close at N410/$1.

Published

on

Forex, Nafex, parallel market, exchange rate, Naira, Dollar

Wednesday, 21st April 2021: The exchange rate between the naira and the US dollar closed at N410 to a dollar at the Importers and Exporters window, where forex is traded officially.

Nigeria’s exchange rate appreciated against the US dollar on Wednesday to close at N410/$1. This represents a 0.16% gain compared to N410.67/$1 recorded on Tuesday, 20th April 2021.

The naira remained stable at the parallel market, closing at N486/$1 on Wednesday, 21st April 2021 after it depreciated by 0.83% in the previous trading session.

Trading at the official NAFEX window

The naira appreciated against the US dollar at the Investors and Exporters window on Wednesday to close at N410/$1. This represents a 67 kobo gain when compared to N410.67/$1 recorded on Tuesday, 20th April 2021.

  • The opening indicative rate closed at N409.54 to a dollar on Wednesday. This is 4 kobo depreciation, compared to N409.5/$1 recorded on Tuesday.
  • Also, an exchange rate of N422 to a dollar was the highest rate recorded during intra-day trading before it settled at N410/$1. It also sold for as low as N394/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window dipped by 59.7% on Wednesday, 21st April 2021.
  • Data tracked by Nairametrics from FMDQ showed that forex turnover decreased from $99.49 million recorded on Tuesday, 20th April 2021, to $40.13 million on Wednesday.

READ: Naira gains at NAFEX window despite 26.2% drop in dollar supply

Cryptocurrency watch

Bitcoin dipped by 3.96% to close at $54,267.91 on Wednesday, 21st April 2021.

  • The world’s most sought-after digital asset lost $2,235.28 in Wednesday’s trading session as the total Cryptocurrency market capitalisation dipped by 2.98% to close at $1.97 trillion.
  • Since the directive by the CBN to place a ban on crypto transactions in the country earlier in the year, usage of Bitcoin’s peer-to-peer trading in Nigeria has surged by 27%.
  • Notably, in the past 85 days, Nigerians have moved about $103 million worth of Bitcoins on just Paxful and LocalBitcoins channels alone.

Crude oil price slumps

The price of Brent crude oil dipped by 1.88% to close at $65.32 on Wednesday, 21st April 2021.

  • The decline in the price of crude was attributed to concerns that surging COVID-19 cases in India will drive down fuel demand in the world’s third-biggest oil importer.
  • Meanwhile, data from the American Petroleum Institute revealed that U.S. crude oil stocks rose by 436,000 barrels in the week ended 16th April 2021.
  • However, Libya’s National Oil Corporation declared force majeure on exports from the port of Hariga due to lack of maintenance funds, consequently shutting down several fields and bringing the country’s production to less than 1 million barrels per day.
  • Brent Crude closed at $65.32 (-1.88%), WTI Crude closed at $61.17 indicating a 0.29% decline, while natural gas also grew by 0.26% to close at $2.699.

READ: Naira remains stable across forex market as dollar supply improves significantly by 430%

External reserve

Nigeria’s external reserve declined by 0.1% on Tuesday, 20th April 2021 to stand at $35.18 billion.

  • According to data obtained from the Central Bank of Nigeria (CBN), Nigeria’s external reserve dipped further on Wednesday from $35.22 billion recorded as of 19th April 2021 to $35.18 billion on Tuesday.
  • The second consecutive decline comes on the back of 19 successive growth recorded in Nigeria’s external reserve position.
  • Meanwhile, the Central Bank of Nigeria has moved to improve dollar inflow into the country by assuring exporters that they will continue to have unrestrained access to their export proceeds.
  • Governor Emefiele however, tasked exporters on repatriation of their export proceeds to improve foreign exchange inflows into Nigeria.

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Currencies

Naira falls against US dollar as CBN extends Naira4dollar scheme indefinitely

The exchange rate between the naira and the US dollar, closed at N411/$1 at the I&E Window.

Published

on

Thursday, 6th May 2021: The exchange rate between the naira and the US dollar, closed at N411/$1 at the Importers and Exporters window, where forex is traded officially.

Naira fell against the US dollar to close at N411 to a dollar on Thursday, 6th May 2021, representing a 50 kobo decline when compared to N410.5/$1 that was recorded on Wednesday, 5th May 2021.

Meanwhile, the naira maintained stability at the parallel market as it closed at N485/$1, while Nigeria’s external reserve plunged $28.94 million to close at $34.76 billion on Wednesday, 5th May 2021.

Also, the apex bank issued an indefinite extension to its Naira4dollar scheme for foreign remittances, which was introduced some months ago. This is aimed at sustaining the country’s foreign exchange market liquidity.

READ: Naira gains at NAFEX window as dollar supply improves by 305%

Trading at the official NAFEX window

The naira depreciated against the US dollar at the Investors and Exporters window on Thursday to close at N411/$1, representing a 50 kobo decline when compared to the N410.5/$1 that was recorded on Wednesday.

  • The opening indicative rate closed at N410.37 to a dollar on Thursday, 6th May 2021, representing a 12 kobo depreciation when compared to the N410.25/$1 recorded on Wednesday.
  • Also, an exchange rate of N420.9 to a dollar was the highest rate recorded during intra-day trading before it settled at N411/$1. It, however, sold for as low as N400/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window declined by 38.4% on Thursday, 6th May 2021.
  • A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover decreased from $172.52 million recorded on Wednesday, 5th May 2021 to $106.34 million on Thursday, 6th May 2021.

READ: Exchange rate depreciates at NAFEX window as Bitcoin slumps by over 5%

Cryptocurrency watch

Bitcoin, the world’s most popular cryptocurrency, slumped by 2% on Thursday to trade at $56,358.03.

  • As of 11:31 pm on Thursday, the highly valued cryptocurrency asset witnessed a decline despite soaring as high as 5.5% on Wednesday.
  • However, Ethereum recorded a marginal growth of 0.07% to close at $3,530.75, capitalising on the 9.1% gain recorded in the previous day.
  • The total crypto market capitalisation depreciated by 0.53% to close at $2.33 trillion on Thursday.
  • 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 the underbanked consumers.

READ: Naira depreciates as dollar sales top $100m a day at I&E window

Crude oil price stalls

Crude oil prices witnessed a bearish trading session on Thursday, 6th May 2021 as the oil price rally stalled due to the worsening covid-19 crisis in India.

  • Brent Crude dipped by 0.97% on Thursday to close at $68.29 compared to its closing price of $68.96 recorded at Wednesday’s trading session.
  • The decline in oil prices, which cut short the rally to $70 a barrel was due to a fresh record of new daily coronavirus cases reported by the third-largest importer of oil in the world.
  • Also, according to energy analytics firm OilX, China’s crude oil imports fell by 11% in April 2021 to stand at 10.41 million barrels per day.

External reserve

Nigeria’s external reserve plunged for the 12th consecutive day on Wednesday, 5th May 2021 as it dipped $28.91 million to close at $34.76 billion.

  • The nation’s foreign reserve declined from $34.79 billion recorded as of Tuesday, 4th May 2021 to $34.76 billion on Wednesday, representing a 0.28% decline.
  • Nigeria’s foreign reserve has dipped $497.36 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 intensified effort to encourage dollar remittances into the country.

Continue Reading

Currencies

How rise in oil prices will impact exchange rate

Oil prices are currently inching closer to $70 per barrel as the positive outlook of a return to global economic recovery swells investor sentiments.

Published

on

Crude oil prices rebound ease investors’ concerns for Nigeria debt market, How substantial is compliance for the Oil market?, Crude Oil price soars high on new COVID-19 vaccine

Nigeria, Africa’s top oil producer and home to the second-largest reserves on the continent, is expected to benefit from the rise in oil prices in many ways.

Oil prices are currently inching closer to $70 per barrel as the positive outlook of a return to global economic recovery swells investor sentiments.

Historically, there has been a strong positive correlation between crude oil prices and the performance of the Nigerian economy. For example, when oil prices plummeted due to the COVID-19 outbreak and the implementation of lockdown protocols in 2020, the Nigerian government scaled down the budget to align better with the drop in crude oil price.

Now that there is a surge in oil price, we should expect that there would be an increase in government revenue translating to a stirring-up of aggregate demand.

READ: Nigeria records highest trade deficit since 1981

Why oil price is rising

The OPEC+ output restrains, despite the strong recovery of oil consumption, continues to give formidable fitting to bullish sentiments about soaring oil prices.

  • Oil prices are rising as optimism about a strong rebound in fuel demand in developed countries overshadows concerns of full lockdown to curb covid-19 in India.
  • Oil (BRENT) has seen a 34.3% increase Year to Date with the oil price at $69.34 showing an increase of +1.15% as of the time of writing this article.

What it means for the exchange rate

Perhaps the greatest benefit of the recent oil price rise is exchange rate stability. Since the crash in oil prices began in late 2019, Nigeria’s official currency has faced a barrage of sell pressure as local and foreign investors increase demand for the dollar.

This forced the central bank to curtain demand, implementing various forms of capital controls across the economy. With oil prices on the rise, Nigerians can begin to expect the following:

Hotflex
  • An increase in government revenue, which also means higher dollar earnings and thus increased FX reserves. Nigeria’s FX reserve reportedly stands at $34.7 billion as of Tuesday, May 4th, 2021. Soaring oil prices strengthen the exchange rate and promote economic growth. This effect trickles down to higher reserves held by the CBN meant for stabilization of the currency.
  • Higher oil prices could also mean a more stable economy thus propelling economic growth. This, in turn, attracts foreign investor dollars or at least retains what we already have and reduces the pressure on demand.
  • Nigerians have intensified diversifying their currency holdings, keeping less of naira and holding more dollars as they hedge against depreciation. This has kept the pressure on the exchange rate over the last one and a half years. This trend could reverse if oil prices continue their steady rise.

READ: Dangote: Cement price from our factories is between N2,450 and N2,510 per bag, VAT inclusive

The implication? The parallel market exchange rate might appreciate closer to the NAFEX rate if this trend continues.

Hence, it is safe to presume that as the world resume business and travel activities, the demand for Black Gold will continue to increase, and with supply held steady by OPEC+ we can speculate that this is enough catalyst to relieve the pressure of FX demand and increase our foreign reserves thereby propelling growth.

However, the inclusivity of this growth may still be in question.

Continue Reading

  





Nairametrics | Company Earnings

Access our Live Feed portal for the latest company earnings as they drop.