Naira crashes to record N502/$1 at the black market as forex speculation increases

Friday, 4th June 2021: The exchange rate between the naira and the US dollar closed at N410.75/$1 at the official Investors and Exporters window.

Naira appreciated against the US dollar on Friday to close at N410.75 to a dollar, representing a 0.04% gain compared to N410.9/$1 recorded on Thursday, 3rd June 2021.

However, the naira hit a record low, as it depreciated against the US dollar on Friday at the parallel market to close at N502 to a dollar. This represents a N3 drop when compared to the N499/$1 that was recorded on Thursday, June 4, 2021.

The local currency closed the week at the lowest in 7 months as speculations continue to affect operations at the forex market.

READ: Why external reserves is falling despite a rise in oil prices

Trading at the official NAFEX window

Naira appreciated against the US dollar at the I&E window on Friday, June 4, 2021, to close at N410.75/$1. This represents a 15 kobo gain when compared with the N410.9/$1 recorded on the previous day.

• The opening indicative rate closed at N411.12/$1 on Friday, representing an 8 kobo drop when compared with the N411.04/$1 recorded on Thursday, 3rd June 2021.
• An exchange rate of N428.27 to a dollar was the highest rate recorded during intra-day trading before it closed at N410.75/$1, while it also sold for as low as N400/$1 during intra-day trading.
• Forex turnover at the Investors and Exporters (I&E) window rose by 64.07% on Friday, June 4, 2021.
• Data tracked by Nairametrics from FMDQ revealed that forex turnover increased from $140.76 million recorded on Thursday, 3rd June 2021 to $230.93 million on Friday, 4th June 2021.

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

Cryptocurrency watch

The world’s biggest and most popular cryptocurrency, Bitcoin, rose by 1.52% on Sunday evening to close at $36,163.87 after dropping earlier in the day.

• Bitcoin and most other top cryptocurrencies fell earlier on Sunday on concerns that there might be a further crackdown on the industry in China.

• According to pricing data from CoinGecko, Bitcoin and many others in the top 30 cryptocurrencies (excluding stablecoins) declined in the past 24 hours as of 12:20 a.m. in London on Sunday.

• Chinese social-media service, Weibo, suspended some crypto-related accounts. When trying to view these accounts, a message pops up saying the accounts have been reported for violations of laws, regulations or Weibo rules.

• Bitcoin is also struggling with technical levels, remaining below its 20-day and 200-day moving averages.

• Ethereum rose by 4.26% on Sunday evening to close at $2,749.55.

Crude oil price

Crude oil prices dropped on Sunday evening with Brent crude closing at $71.86 per barrel after hitting a 2-year high about 2 days ago.

• On Sunday, 6th June 2021, Brent Crude recorded a marginal decline of 0.04% to close at $71.86.

• Oil prices have been on the rise as OPEC+ succeeds in draining global inventories while successful vaccine programs give hope that the end of the global pandemic may be in sight.

• This is also as oil demand recovery continues, countering concerns about a patchy Covid-19 vaccination rollout across the globe.

• A robust rebound from the pandemic in the U.S., China and Europe has driven prices more than 40% higher this year, although the Covid-19 comeback across Asia is a reminder that the recovery will be uneven.

• WTI rose by 0.04% to close at $69.65, the Bonny light crude rose by 1.39% to close at $70.99, the OPEC basket rose by 1.29% to close at $69.89 while natural gas closed at $3.109, representing a 0.39% increase.

External reserve

Nigeria’s external reserve dropped by $28 million on Thursday, 3rd June 2021 to close at $34.191 billion, representing a 0.08% decline when compared to $34.219 billion recorded on Monday, 31st May 2021.

• Nigeria’s foreign reserve has lost about $1.178 billion year-to-date, having recorded declines consecutively for 30 days.

• The current position also represents the lowest level in over one year. The last time Nigeria’s foreign reserve position was this low was 7th May 2021, when it stood at $31.19 billion.

• The decline persists despite the increase in global crude oil prices.

• The decline can be attributed to a drop in crude oil export, due to the reduction in the purchase of Nigeria’s crude oil by India, which is a major importer of Nigerian crude, due to the outbreak of the second wave of the pandemic.