Thursday, 27th 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.
The Naira appreciated further against the US dollar on Thursday at the official NAFEX window to close at N411 to a dollar. This represents a 0.12% gain when compared to N411.50/$1 recorded on Wednesday, 26th May 2021.
However, the Naira hit an almost three-and-a-half-year low, as it depreciated at the parallel market, closing at N495/$1 on Thursday, May 27, 2021. This shows a N2 drop when compared to the N493/$1 that was recorded the previous day.
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The Naira fell to a near three and half year low at the black market after the CBN adopted the NAFEX rate as the new official exchange rate and the country’s external reserve lost N987.1 million in about 6 weeks.
According to Reuters, the naira hit N500 to a dollar at the black market in November, a more than 3 and half year low.
The exchange-rate movement at the black market is driven by speculation based on the adoption of the NAFEX rate by the CBN.
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Trading at the official NAFEX window
Naira appreciated against the US dollar at the Investors and Exporters window on Thursday to close at N411/$1, representing a 50 kobo gain when compared to the N411.50/$1 that was recorded the previous day.
- The opening indicative rate closed at N411.08 to a dollar on Thursday 27th May 2021, representing a 30 kobo gain when compared to the N411.38 to a dollar that it closed at on Wednesday, 26th May 2021.
- An exchange rate of N420.25 to a dollar was the highest rate recorded during intra-day trading before it settled at N411/$1. It also sold for as low as N400/$1 during intra-day trading.
- Forex turnover at the Investors and Exporters (I&E) window declined by 25.7% on Thursday, 27th May 2021.
- Data tracked by Nairametrics from FMDQ revealed that forex turnover dropped from $471.85 million recorded on Wednesday, 26th May 2021 to $350.65 million on Thursday, 27th May 2021.
READ: Diaspora remittances are down 61% YoY highlighting need for CBN’s Naira4Dollar promo
Cryptocurrency watch
The world’s biggest cryptocurrency, Bitcoin, dropped by 2.05% to close at $37,792.31 on Thursday evening, losing over $870 in the last 24 hours.
- Blockchain data shows that the bearish market sentiment is weakening, as oversold bitcoin may succeed in establishing a foothold above $40,000.
- Bitcoin has been moving upwards since it reached a low of $30,000 on May 19, 2021.
- Ether, the coin linked to the Ethereum blockchain network, dropped by 3.12% to close at $2,688.37 on Thursday evening, losing over $83 in the last 24 hours. Its trading volume also rose.
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Crude oil price
Oil prices moved towards the $70 mark on Thursday evening with Brent crude closing at $69.62 with a 0.23% increase.
- OPEC and its allies are expected to go ahead by next week with their May-July plan to boost supply and ease the oil production cuts by the planned 840,000 barrels per day (BPD) in July. Overall, OPEC+ is expected to return to the market with as much as 2.1 million BPD by July.
- Despite the resurgence of COVID in major oil-importing markets in Asia such as India and Japan, OPEC and its allies, as well as forecasters and analysts, expect the market to absorb the additional barrels, even in case Iran returns legitimately among the oil exporters at some point in the second half of this year.
- Crude markets have so far comfortably absorbed the extra barrels, with prices climbing above $70 a barrel in London last week for the first time in 2 months. Brent futures have since eased slightly, amid concerns over the latest virus outbreak in India.
- WTI Crude rose by 0.39% on Thursday to close at $67.11, Bonny light rose by 0.50% to close at $68.01, while Natural Gas rose by 0.24% to close at $2.965.
External reserve
Nigeria’s external reserve plunged further by $19 million on Wednesday, 26th May 2021, to close at $34.268 billion.
- The nation’s foreign reserve declined from $34.287 billion recorded on Tuesday, 25th May 2021 to $34.268 billion on Wednesday, representing a 0.06% drop.
- Nigeria’s foreign reserve has dipped by $987.1 million since 16th April 2021, when the decline started, while year-to-date, the country’s reserve has dipped by about $1.106 billion.
- The decline in external reserve continues despite recent increases recorded in the crude oil market and the various policies by the apex bank aimed at boosting dollar inflow and remittances into the country.
- The decline could be attributed to reports of a drop in crude oil exports to India, the biggest buyer of Nigeria’s crude oil and a nation still heavily hit by the Covid-19 pandemic.
The law of economics 101 is produce or perish. Nigeria must understand that the old order of grow, manufacture or create is still the norm. We need to learn or things will continue felling apart!