Wednesday, 9th June 2021: The exchange rate between the naira and the US dollar closed at N410.95/$1 at the official Investors and Exporters window.
Naira appreciated against the US dollar on Wednesday to close at N410.95 to a dollar, representing a 0.13% gain compared to N411.50/$1 recorded on Tuesday, 8th June 2021.
However, the naira maintained stability against the US dollar on Wednesday at the parallel market to close at N502 to a dollar. This was the same rate that was recorded on Tuesday, June 8, 2021.
The dollar supply rose massively by 261.5% as BDC directors pledge their support for exchange rate stability.
READ: Naira appreciates at NAFEX as CBN sells forex to foreign investors, first in 2021
Trading at the official I&E window
Naira appreciated against the US dollar at the I&E window on Wednesday, June 9, 2021, to close at N410.95/$1. This represents a 55 kobo gain when compared with the N411.50/$1 recorded the previous day.
- The opening indicative rate closed at N411.15/$1 on Wednesday, representing a 20 kobo drop when compared with the N410.95/$1 recorded on Tuesday, 8th June 2021.
- An exchange rate of N420.77 to a dollar was the highest rate recorded during intra-day trading before it closed at N410.95/$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 massively by 261.5% on Wednesday, June 9, 2021.
- Data tracked by Nairametrics from FMDQ revealed that forex turnover increased from $62.79 million recorded on Tuesday, 8th June 2021 to $226.98 million on Wednesday, 9th June 2021.
READ: Exchange rate gains at NAFEX window as crypto market crashes to high selloffs
Cryptocurrency watch
The world’s biggest and most popular cryptocurrency, Bitcoin, rose by 12.86% on Wednesday evening to close at $37,069.35 as El Salvador became the first country to formally adopt Bitcoin as legal tender after the country’s President said that congress approved his proposal.
- Bitcoin’s price had earlier fallen to its lowest point in over a week as traders stare down prospects of shifting U.S. monetary policy and continued tightening of regulation of cryptocurrencies in China.
- Senior Market Analyst with Oanda Corp, Edward Moya had said that Bitcoin is dangerously approaching the $30,000 level amid growing regulatory fears in the U.S., and a break of $30,000 could see a tremendous amount of momentum selling.
- Further weakness in its price may bring the $20,000 zone into view as a downside target. Bitcoin has dropped about 7% this week and was trading at about $34,200 as of 10:16 a.m. in London.
- Ethereum rose by 4.19% on Wednesday evening to close at $2,569.20.
READ: Nigeria’s import bill surges to highest in over 12 years
Crude oil price
Crude oil prices fell slightly on Wednesday with Brent crude dropping to $71.66 after the Energy Information Administration (EIA) reported an inventory decline of 5.2 million barrels for the week to June 4, nullifying the optimism on demand that drove crude to the highest since 2018 this week.
- A day earlier, the American Petroleum Institute had reported an inventory draw of over 2.1 million barrels for the period.
- Analysts had expected the EIA to report an inventory draw of 3.576 million barrels, after last week the EIA estimated inventories had shrunk by over 5 million barrels for the last full week of May.
- Oil has been trending higher again this week, with Brent hitting over $72 per barrel earlier and West Texas Intermediate at over $70 per barrel, mostly driven by the rebound in demand for fuels and OPEC+ plans to not rush with the easing of its production cap.
- Brent crude dropped by 0.78% to close at $71.66. The WTI declined by 0.77% to close at $69.42, the Bonny light crude rose by 0.23% to close at $70.98, the OPEC basket rose by 0.46% to close at $70.21 while natural gas closed at $3.155, representing a 0.83% increase.
External reserve
Nigeria’s external reserve continued its decline, as it dropped by $26 million on Tuesday, 8th June 2021 to close at $34.077 billion, representing a 0.08% decline when compared to $34.103 billion recorded on Monday, June 7, 2021.
- Nigeria’s foreign reserve has lost about $1.292 billion year-to-date, having recorded declines consecutively for 33 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 arising from the reduction in the purchase of Nigeria’s crude oil by India, a major importer of Nigerian crude and a nation currently burdened by a second wave of the covid-19 pandemic.