Naira falls at official window as dollar supply drops by 153%

Thursday, 10th June 2021: The exchange rate between the naira and the US dollar closed at N411.83/$1 at the official Investors and Exporters window.

Naira depreciated against the US dollar on Thursday to close at N411.83 to a dollar, representing a 0.21% drop compared to N410.95/$1 recorded on Wednesday, 9th June 2021.

However, the naira continued to maintain stability against the US dollar on Thursday at the parallel market to close at N502 to a dollar. This was the same rate that was recorded on Wednesday, June 9, 2021.

The dollar supply to the forex market dropped significantly by 152.5% as demand pressure and speculation persist.

Trading at the official I&E window

Naira depreciated against the US dollar at the I&E window on Thursday, June 10, 2021, to close at N411.83/$1. This represents an 88 kobo drop when compared with the N410.95/$1 recorded the previous day.

• The opening indicative rate closed at N410.79/$1 on Thursday, representing a 36 kobo gain when compared with the N411.15/$1 recorded on Wednesday, 9th 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 dropped significantly by 152.5% on Thursday, June 10, 2021.
• Data tracked by Nairametrics from FMDQ revealed that forex turnover declined from $226.98 million recorded on Wednesday, 9th June 2021 to $89.89 million on Thursday, 10th June 2021.

Cryptocurrency watch

The world’s biggest and most popular cryptocurrency, Bitcoin, dropped by 0.70% early on Friday morning to close at $36,836.44 after going above $38,000 on Thursday following the Basel Committee’s proposal which gave banks a green light to hold the leading cryptocurrency and other digital assets.

• The top cryptocurrency had hit a high of $38,461 during the European hours, extending Wednesday’s double-digit rally to above $37,500, according to CoinDesk 20 data.
• The International Monetary Fund (IMF) had said that El Salvador’s adoption of Bitcoin as legal tender may imply risks and regulatory challenges.
• JP Morgan in its analysis said that Bitcoin’s recent bounce has yet to dispel doubts about its vulnerability following the rout in May.
• Ethereum dropped by 4.12% on Wednesday evening to close at $2,463.71.

Crude oil price

Oil prices dropped on Thursday, with the Brent crude closing at N72.15 after the United States removed some Iranian oil officials from its list of designated persons’ subject to sanctions.

• Oil is poised to eke out a third weekly gain after bouncing around $70 a barrel this week as investors digested varying demand signs.

• Oil topped $70 a barrel this week for the first time in more than two years, but U.S. data signaling a large increase in gasoline stockpiles and slowing demand took some of the heat out of the market.

• OPEC said that the global oil demand will rise by 6 million barrels per day (BPD) this year, led by strong consumption in China and the United States especially in the second half of 2021 with growing economies and border re-openings, keeping its 2021 demand forecast unchanged from last month.

• Brent crude dropped by 0.51% to close at $72.15. The WTI declined by 0.53% to close at $69.92, the Bonny light crude rose by 0.28% to close at $71.93, the OPEC basket dropped by 0.57% to close at $69.81 while natural gas closed at $3.243, representing a 2.99% increase.

External reserve

Nigeria’s external reserve continued its decline, as it dropped by $29 million on Wednesday, 9th June 2021 to close at $34.048 billion, representing a 0.03% decline when compared to $34.077 billion recorded on Tuesday, June 8, 2021.

• Nigeria’s foreign reserve has lost about $1.321 billion year-to-date, having recorded declines consecutively for 34 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.