Naira weakens at NAFEX window as dollar supply continues to dwindle

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Wednesday, 31th March 2021, the exchange rate between the naira and the US Dollar closed at N408.67/$1 at the Investors and Exporters window.

The naira appreciated against the US Dollar on Wednesday, 31st March 2021 gaining for the fifth consecutive day at the NAFEX window to close at N408.67 to a dollar despite a 26.2% drop in dollar supply.

This represents a 0.08% gain, when compared to N409/$1 recorded on Tuesday, 30th March 2021.

However, the naira remained stable at the parallel market, closing at N486/$1, the same rate recorded on the previous trading day.

READ: Naira strengthened at black market as external reserve loses $437 million in 2 weeks

Trading at the official NAFEX window

The naira appreciated against the US Dollar at the Investors and Exporters window on Wednesday to close at N408.67/$1. This represents a 33 kobo gain when compared to N409/$1 recorded on Tuesday, 30th March 2021.

  • The opening indicative rate closed at N409 to a dollar on Wednesday. This represents a 7 kobo gain when compared to the N409.07/$1 that was recorded on Tuesday.
  • Also, an exchange rate of N412 to a dollar was the highest rate recorded during intra-day trading before it closed at N408.67/$1. It also sold for as low as N381/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window dropped by 26.2% on Wednesday, 31th March 2021.
  • A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover declined from $47.93 million recorded on Tuesday, March 30, 2021, to $35.37 million on Wednesday.

READ: Naira remains flat as external reserve fall to just 6 months of imports

Cryptocurrency watch

Bitcoin, the most priced and popular cryptocurrency in the world gained 0.05% on Wednesday evening to trade above $58, 956.87 as it inches closer to the $60,000 mark.

  • Goldman Sachs will reportedly jump on the bitcoin bandwagon as it will soon offer its private wealth management clients avenues to invest in bitcoin and other digital currencies.
  • The decision by Goldman shows major financial institutions are beginning to embrace cryptocurrencies after years of scepticism over to their volatile nature.
  • Bitcoin’s rally over the past few months has intrigued wealthy investors in a new way.
  • European Central Bank President, Christine Lagarde said her institution could launch a digital currency around the middle of this decade if her fellow policymakers give the project the green light this summer.
  • Ethereum also gained 2.18% to trade at $1,927.55 as of Wednesday night.

READ: Naira gains at NAFEX as oil prices record biggest single day loss in 11 months

Oil prices show contrasting movement

Oil prices recorded contrasting trading result on Wednesday with a drop by Brent crude while WTI crude rose during the day’s trading.

  • Brent Crude as of Wednesday evening traded at $63.54 after France announced that it will start a month-long lockdown.
  • OPEC+ has also expressed its concern about the strength of oil demand ahead of its meeting on Thursday, where a decision on output is expected to be taken.
  • An OPEC+ panel advising the group has revised down its global oil demand forecast for 2021 by 300,000 barrels per day (BPD) due to the renewed lockdowns in Europe amid a third wave of the coronavirus pandemic.
  • Meanwhile, despite recent signs of weakening oil demand as Europe grapples with a new wave of Covid-19 cases, analysts have said that the crude oil futures market structure still points to demand beginning to outpace supply in the second half of 2021.
  •  Brent crude dropped by 0.94% during intra-day trading on Wednesday while WTI Crude rose by 0.68% during the same period after it initially fell by $1.39 earlier in the morning.
  • Brent ($63.54), WTI crude ($59.56), Bonny Light ($63.13), OPEC Basket ($63.37), and Natural Gas ($2.604).

External reserve rebound continues

Nigeria’s external reserve increased by 0.09% on Tuesday 30th, March 2021 to stand at $34.79 billion.

  • This represents the seventh consecutive day increase, gaining a total of $370 million from $34.42 billion recorded as of March 18, 2021, to $34.79 billion as of 30th March 2021.
  • Nigeria’s reserve had lost about $860 million year-to-date before recording increases in the past seven days, which indicates that the recent oil price rally is beginning to reflect in the country’s external reserve.
  • It is important for Nigeria that the increase continues as it will help the Central Bank stabilise the exchange rate against other currencies and meet up with pent-up obligations due to the lockdown embarked on in 2020.



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