Exchange rate gains at NAFEX window as foreign reserve plunges further
- 18th May 2021
- Posted by: Hakeem
- Category: Currencies
Monday, 17th May 2021: The exchange rate between the naira and the US dollar closed at N411.5 to a dollar at the official Importers and Exporters window.
Naira gained marginally against the US dollar to close at N411.5/$1 on Monday, which represents a 17 kobo appreciation when compared to N411.67 recorded on Friday, 14th May 2021.
The rate, however, maintained stability at the parallel market as naira closed at N484 to a dollar, which was the same as recorded on Friday last week, while dollar supply declined by 45.2% to stand at $111.53 million. Also, Nigeria’s external reserve plunged further by $74.02 million on Friday, 14th May 2021 as it stands at $34.51 billion.
Trading at the official NAFEX window
The naira gained marginally against the US dollar at the Investors and Exporters window on Monday to close at N411.5/$1, representing 0.04% appreciation when compared to the N411.67/$1 that was recorded on Friday.
- The opening indicative rate closed at N410.28 to a dollar on Monday, 17th May 2021, representing a 12 kobo gain when compared to N410.4/$1 recorded on Friday.
- Also, an exchange rate of N425.9 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.5/$1. It, however, sold for as low as N395/$1 during intra-day trading, the same as recorded on Friday.
- Forex turnover at the Investors and Exporters (I&E) window declined by 45.2% on Monday, 17th May 2021.
- A cursory look at the data tracked by Bigwig FX from FMDQ showed that forex turnover decreased from $203.42 million recorded on Friday, 14th May 2021 to $111.53 million on Monday, 17th May 2021.
The world’s most capitalised and sought-after digital currency, Bitcoin, slumped further by 4.23% on Monday, 17th May 2021 to trade at $44,421.12.
- The decline was attributed to Elon Musk’s tweet in response to a Twitter user who suggested that Tesla had dumped the rest of their Bitcoin holdings.
- Elon Musk had been more of an influencer for Bitcoin, through his tweets in recent months, which had helped drive some of the gains recorded by the highly coveted asset. Bitcoin slid 17% last week when Elon Musk said that his customers would no longer be able to use bitcoin to buy its cars.
- However, Elon Musk has debunked the claim and stated that Tesla has not sold any Bitcoin, contrary to the earlier suggestion.
Crude oil price
Crude oil traded bullish on Monday, as Brent Crude gained 1.16% to trade at $69.51, compared to $68.71 recorded at the close of trade on Sunday.
- The optimism in the crude oil market was largely affected by the increase in demand, as travel starts to recover in major economies of the world, especially the United States. According to data from the Department of Homeland Security Transportation Security Administration, at least 1 million people were screened daily at American airports since the middle of March.
- Also, as quoted by Bloomberg, Iran is preparing to boosts its production and export of crude oil, as they progress in their discussion with the United States on a nuclear deal. Iran could return to a production level of 4 million barrels per day in the next three months.
- Meanwhile, fuel demand in India continues to record significant decline due to the Covid-19 crisis, which has hampered the consumption of gasoline and diesel in the country.
- As of 9:20 pm on Monday, 17th May 2021, WTI Crude had gained 1.48% to trade at $66.34, Natural Gas grew by 5.27% to trade at $3.117, Bonny Light gained 1.77% to trade at $67.38.
Nigeria’s external reserve plunged by $74.02 million on Friday, 14th May 2021 to stand at $34.51 billion.
- The nation’s foreign reserve declined from $34.58 billion recorded as of Tuesday, 11th May 2021 to $34.51 billion on Friday, representing a 0.21% decline.
- Nigeria’s foreign reserve has dipped by $749.03 million since 16th April 2021 to date, while year-to-date, the country’s reserve has dipped $867.98 million.
- The persistent decline in external reserve is despite the recent increase in crude oil prices and the continued effort of the apex bank to increase dollar inflow by incentivising dollar remittances into the country.