Wednesday, 30th June 2021: The exchange rate between the naira and the US dollar closed at N411.5/$1 at the official I&E window.
Naira depreciated against the US dollar on Wednesday to close at N411.5 to a dollar compared to N410.83/$1 rate recorded on Tuesday, 29th June 2021.
The exchange rate also depreciated against the US dollar at the parallel market to close at N503/$1 compared to N502/$1 recorded on Tuesday. The drop in the value of the naira may be attributed to the activities of speculators and lower liquidity at the forex market.
Meanwhile, crypto investors lost about $40.35 billion on Thursday morning, as the market dipped by 2.81% to bearish sentiments resulting from recent regulatory scrutiny witnessed by the industry.
READ: Naira falls at official window as external reserve declines to 4-year low
Trading at the official NAFEX window
Naira fell against the US dollar at the Investors and Exporters window at Wednesday’s trading session to close at N411.5/$1 from N410.83/$1 recorded at the end of trade on Tuesday, 29th June 2021.
- The opening indicative rate depreciated by 20 kobo to close at N411.21 to a dollar on Wednesday, 30th June 2021 compared to N411.01/$1 recorded the previous day.
- An exchange rate of N420.95 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.5/$1, while it sold for as low as N400/$1 during intra-day trading.
- Meanwhile, forex turnover at the Investors and Exporters (I&E) window slumped by 25.7% on Wednesday, 30th June 2021.
- According to data tracked by Nairametrics from FMDQ, forex turnover decreased from $215.53 million recorded on Tuesday, 29th June 2021 to $160.12 million on Wednesday, 30th June 2021.
READ: Nigerians suffer Shrinkflation as economic conditions worsen
Cryptocurrency watch
The crypto market continued its bearish performance into Thursday, as it dipped by over $40.35 billion in the early hours of Thursday, indicating a 2.81% decline.
- The total cryptocurrency market capitalisation recorded a decline of 2.81% to stand at $1.39 trillion as of 5:32 am on Thursday.
- The world’s most popular cryptocurrency, bitcoin also dipped by 2.42% to trade at $34,162.31 as of the same period. Ethereum recorded a 3.75% decline to trade at $2,190.87.
- This came on the back of the regulatory crackdowns towards the industry in China and in the UK.
- Meanwhile, a US congressman has called for a law that will allow the government to identify cryptocurrency users and reverse their crypto transactions. This law, if passed, will remove the anonymity of the users and traders of crypto assets.
Crude oil price
Crude oil prices jumped higher on Wednesday after the Energy Information Administration reported a decline in inventory by 6.7 million barrels for the previous week.
- On Wednesday, Brent Crude gained 0.49% to close at $75.13 per barrel, while WTI Crude recorded a gain of 0.67% to close at $73.47 per barrel.
- Before the EIA report, the American Petroleum Institute had reported a crude oil inventory draw of 8 million barrels in the previous week. Indicating six weeks of consecutive inventory draws.
- However, with the ongoing OPEC+ meeting, the organisation has expressed fears of a significant oil glut in the market after April 2022.
- This assessment of the panel, whose meeting on Tuesday launched this week’s decision-making gathering of the coalition, suggests that OPEC+ may opt to continue the ongoing deal in some form after April 2022 to ensure a balanced oil market.
- Currently, the organisation keeps around 5.7 million barrels per day (bpd) off the market under an agreement reached in April 2020, which is set to expire in April 2022.
- It is worth noting that OPEC+ will decide on July 1st on how to proceed with its oil supply management policy in August.
External reserve
Nigeria’s external reserve dipped by $46.3 million on Tuesday, 29th June 2021 to stand at $33.37 billion. This represents a 0.14% decline compared to the $33.42 billion recorded the previous day.
- Nigeria’s foreign reserve fell to its lowest position since October 2017, as its year-to-date decline surpasses $2 billion, while its month-to-date decline stands at $858.53 million. This is despite the recent bullish trend recorded in the global oil market.
- The decline may be attributed to reduced forex earnings, especially from crude oil export due to the cut in production quota, as well as the widening international trade deficit.
- The CBN, which operates a managed float foreign exchange system, also periodically supports the currency using the external reserves, and a lower reserve is expected to affect the currency.