Naira gains at NAFEX window despite low liquidity in forex market
- 30th March 2021
- Posted by: Hakeem
- Category: Currencies
Monday, 29th March 2021, the exchange rate between the naira and the US Dollar closed at N409.13/$1 at the Investors and Exporters window.
Naira appreciated against the US Dollar on Monday, 29th March 2021 after gaining for 2 consecutive days at the NAFEX window to close at N409.13 to a dollar despite very low dollar supply.
This represents a 0.21% gain, when compared to N410/$1 recorded on Friday, 26th March 2021.
However, the naira remained stable at the parallel market, as it closed at N485/$1, this was the same rate that was recorded on the previous trading day.
Trading at the official NAFEX window
Naira appreciated against the US Dollar at the Investors and Exporters window on Monday to close at N409.13/$1. This represents an 87 kobo gain when compared to N410/$1 recorded on Friday, 26th March 2021.
- The opening indicative rate remained stable to close at N409.17 to a dollar on Monday. This was the same rate that was recorded on Friday.
- Also, an exchange rate of N410.50 to a dollar was the highest rate recorded during intra-day trading before it closed at N409.13/$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 57.4% on Monday, 29th March 2021.
- A cursory look at the data tracked by Bigwig FX from FMDQ showed that forex turnover declined from $72.43 million recorded on Friday, March 26, 2021, to $30.84 million on Monday.
Bitcoin, the most priced and popular cryptocurrency in the world gained 3.22% on Monday evening to trade above $57,623 following more news of potential mainstream financial adoption of cryptocurrencies by major players.
- Visa had said it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network.
- Ethereum also gained 7.29% to trade at $1,815.13 as of Monday night.
- Large firms including Mastercard, Paypal and BlackRock have started using some digital coins in recent months.
- Currency watchers have speculated that this is part of the reason for Bitcoin’s recent meteoric rise.
Oil price rebound continues
Oil price increase continued on Monday with the focus moving towards OPEC+ meeting.
- Brent Crude as of Monday evening traded at $65.07 per barrel as OPEC+ is scheduled to hold a meeting this week to decide on its output policy for May.
- While multiple factors may impact the group’s decision, the markets already priced in an expected rollover of current cuts through May.
- The closure of the Suez Canal led to a moderate price rally last week, which came after a significant decline in oil prices triggered by new and stringent lockdowns in Europe.
- The impact of the Suez Canal crisis on oil markets has been marginal due to a number of factors which include: slowing demand especially in the EU, relatively high inventory figures and the low volumes of crude oil passing through the canal (less than 5% of global supply).
- Brent crude gained about 0.77% during intra-day trading on Monday while WTI Crude rose by 0.97% during the same period.
- Brent ($65.07), WTI crude ($61.56), Bonny Light ($63.00), OPEC Basket ($62.56), and Natural Gas ($2.586).
External reserve increase continues for the 5th consecutive day
Nigeria’s external reserve increased by 0.06% on Friday 26th, March 2021 to stand at $34.67 billion.
- This represents the sixth consecutive day increase, gaining a total of $230 million from $34.42 billion recorded as of March 18, 2021, to $34.67 billion as of 26th March 2021.
- Nigeria’s reserve had lost about $980 million year-to-date before recording increases in the past six 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.