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

Thursday 18th March 2021: The exchange rate between the naira and the US Dollar closed at N409.67 to a dollar at the Investors and Exporters window.

The Naira appreciated marginally against the US Dollar on Thursday, 18th March, to close at N409.67/$1. This represents a 0.02% gain when compared with the N409.75/$1 that was recorded on Wednesday, 17th March 2021 despite oil prices recording the single biggest day loss in 11 months

Also, the Naira maintained stability against the US Dollar in the parallel market, to close at N485 to a dollar. the same as the rate that was recorded on the previous day.

Trading at the official NAFEX window

Naira appreciated against the US Dollar at the Investors and Exporters window on Thursday to close at N409.67 to a dollar. This represents an 8 kobo gain when compared to the N409.75 to a dollar that was recorded on Tuesday, March 17, 2021.

  • The opening indicative rate closed at N409.14 to a dollar on Thursday. This represents a 64 kobo gain when compared to N409.78/$1 recorded on Wednesday.
  • Also, an exchange rate of N412 to a dollar was the highest rate during intra-day trading before it closed at N409.67/$1. It also sold for as low as N400/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window dropped by 33.9% on Thursday, 18th March 2021.
  • A look at the data tracked by Bigwig FX from FMDQ, forex turnover declined from $148.54 million recorded on Wednesday, March 17, 2021, to $98.20million on Thursday, March 18, 2021

Cryptocurrency watch

Bitcoin, the world’s most popular and largest cryptocurrency dropped by 3.77% on Thursday evening to trade at $56,878.47 after trading at about $59,000 earlier in the day following an optimistic forecast by the Federal Reserve Bank.

  • The Federal Reserve had reaffirmed its expectation to keep interest rates close to zero at least throughout 2023 potentially bolstering the cryptocurrency’s appeal as a hedge against faster inflation.
  • A lot of analysts have said that a key reason why bitcoin’s price has doubled this year is because very few holders are willing to part with the cryptocurrency, meaning you have more buyers than sellers.
  • The price is also partly boosted because of demand from institutional investors who are looking for an asset that might hold its worth if the dollar’s purchasing power declines.

Oil prices continue to decline

Brent Crude oil on Thursday 18th March 2021 dropped for a fifth consecutive trading day by 6.64% to close at $63.28, as oil sees the biggest single-day loss since April 2020.

  • Despite initial positive prediction during the recent price rally, some analysts have been more cautious in their outlooks, having warned for a couple of weeks that the present optimism in the oil markets was unjustified.
  • The recent rally was largely due to production cuts by OPEC+ or rather, the fact that they agreed to hold production steady in April, instead of ramping up production as the market had anticipated. The passing of the 3rd round of stimulus in the United States had also bolstered oil market sentiment.
  • But a rising dollar, increased crude inventories in the U.S., growing fears of a resurgence in coronavirus cases and vaccine safety concerns in Europe have proven worthy adversaries.
  • WTI Crude closed at $64.28 (+0.32%), OPEC Basket $66.89 (-.89%), Bonny Light $66.20 (-1.05%), and Natural Gas $2,508 (-0.79%).

External reserve sustains decline

Nigeria’s external reserve declined by 0.09% on Wednesday, 17th March 2021 to stand at $34.44 billion being a record low in 10 months.

  • The country’s external reserve declined from $34.48 billion recorded as of Tuesday, 16th March 2021 to stand at $34.44 billion as of 17th March 2021.
  • Nigeria’s current external reserve position indicates a total drop of about $560 million in the month of March 2021.
  • In December 2020, when the external reserve was $36.4 billion the CBN claimed it could finance 8.4 months of import of goods or 6.3 months of import of goods and services.
  • This infers that at $34.48 billion, the external reserve can now service about 7.9 months of imports of goods and 5.99 months of imports of goods and services.


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