Wednesday, 25th August 2021: The exchange rate between the naira and the US dollar closed at N412/$1 at the Investors and Exporters window, where forex is traded officially.
Naira depreciated against the US dollar on Wednesday to close at N412/$1, representing a N1 differential depreciation compared to N411/$1 recorded at the close of trading on Tuesday, 24th August 2021.
On the other hand, the naira remained flat at the parallel market as it closed at N521/$1 on Wednesday, 25th August 2021, the same as recorded in the previous day. It is worth noting that the rate had depreciated from N515 to a dollar recorded as of Friday, 20th August 2021.
Nigeria’s foreign reserve dipped $31.29 million on Tuesday, 24th August 2021 to close at $33.39 billion, thereby cancelling out its month-to-date gain initially recorded. The reserves have now depleted $3.34 million in the month of August 2021.
Forex liquidity appreciated significant in the I&E window as supply grew by 132.6% at $180.19 million on Wednesday.
Crude oil prices recovered from the recent bearish trade, as Brent Crude climbed above $70 per barrel on Tuesday, 24th August 2021, having gained 3.51% on the back of a major production outage.
Trading at the official NAFEX window
The exchange rate depreciated against the US dollar on Wednesday, 25th August 2021 to close at N412 to a dollar, representing a 0.24% fall compared to N411/$1 recorded in the previous trading day.
The opening indicative rate closed at N411.74/$1, representing a depreciation compared to N411.74/$1 recorded on Tuesday.
An exchange rate of N413 to a dollar was the highest rate recorded during intra-day trading before it settled at N412/$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 increased significantly by 132.6% on Wednesday, 25th August 2021.
According to data from FMDQ, forex turnover increased from $77.46 million recorded on Tuesday to $180.19 million on Wednesday, 25th August 2021.
Cryptocurrency watch
The crypto market started the day on a bearish note as it has dipped about 3.51% on Thursday morning, to stand at $1.994 trillion in capitalisation.
The negative performance of the market is attributed to the loss recorded in the most valuable crypto asset, Bitcoin as it has also lost 3.82% as of the same time to trade at $47,105.97, while Ethereum dipped 3.28% to trade at $3,123.62. Similarly, XRP dipped 4.42% to trade at $1.1232.
Recent data revealed that Sub-Saharan Peer-to-Peer Bitcoin trading has surpassed that recorded from North America, making the region the largest P2P market globally. Also, Nigeria led the likes of Kenya and Ghana with $8,761,051 in BTC traded volume for the period.
Crude oil price
The crude oil market started Thursday on a negative note as Brent Crude dipped 0.55% to trade at $71.85 per barrel as of 6:36 am on Thursday, 26th August 2021.
Similarly, WTI Crude also started with loss as it depreciated by 0.83% at $67.79, while natural gas appreciated by 0.67% at $3.923.
The market had recorded positive trades earlier in the week due to optimism about falling cases of the covid-19 infections in China and a major production outage in the Gulf of Mexico. A fire on Sunday killed five workers on an offshore platform operated by Mexico’s state oil firm Pemex and injured another six. This incident reduced Mexico’s crude oil production by 421,000 bpd.
Meanwhile, the market started negative as Mexico’s Pemex is set to fully restore its production. The oil firm has restored about 17% of the more than 400,000 bpd in oil production that was lost during the fire outbreak over the weekend.
External reserve
Nigeria’s foreign reserve declined further on Tuesday, 24th August 2021 by $31.29 million to close at $33.39 billion compared to $33.43 billion recorded as of Monday, 22rd August 2021. This represents a 0.09% decline compared to the previous day.
The latest decline cancelled out the positive movement in the month of August as the month-to-date movement in the external reserves, is currently at a $3.34 million deficit, having recording daily declines for 10 consecutive days.
Its year-to-date change shows a $1.97 billion loss compared to $35.37 billion recorded as of 31st December 2021.
While recent reports have suggested that Nigeria’s foreign reserve position could grow as high as $40 billion by the end of September 2021, the recent decline in the external reserve could be attributed to the decline recorded in the global crude oil market in recent weeks.