Exchange rate gains marginally at official market as crude oil price rises above $75

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Wednesday, 15th September 2021: The exchange rate between the naira and the US dollar closed at N412.06/$1, at the official Investors and Exporters window.

Naira recorded a marginal gain against the US dollar on Wednesday, to close at N412.06/$1, compared to N412.08/$1 recorded on Tuesday, 14th September 2021.

Meanwhile, the exchange rate at the parallel market slumped to a new record on Wednesday to close at N562/$1 compared to N557/$1 recorded in the previous trading session. This represents a 0.9% depreciation and further widens the gap between the black market rate the official rate.

The persistent fall of the exchange rate at the parallel market has been attributed to demand pressure from Investors who couldn’t obtain forex from the banks. The latest depreciation at the black market increases the gap compared to the official market to a massive N149.94.

Nigeria’s foreign reserves recorded a further boost of $80.15 million on Tuesday, 14th September to close at $35.19 billion, compared to $35.11 billion recorded a day before. The reserve position has gained $1.17 billion so far in the month of September 2021. Also, Brent Crude rose above the $75 per barrel level on Wednesday, largely attributable to the recent OPEC September oil demand forecast.

Trading at the official NAFEX window

The exchange rate appreciated marginally against the US dollar on Wednesday 15th September 2021 to close at N412.06 to a dollar, representing a 0.005% gain compared to N412.08/$1 recorded in the previous trading day.

The opening indicative rate closed at N412.46/$1, a 28 kobo depreciation compared to N412.18/$1 recorded on Tuesday, 14th September 2021.

An exchange rate of N415 to a dollar was the highest rate recorded during intra-day trading before it settled at N412.06/$1, while it sold for as low as N405/$1 during intra-day trading.

Meanwhile, forex turnover at the Investors and Exporters (I&E) window increased significantly by 76.4% on Wednesday, 15th September 2021.

According to data tracked by Nairametrics from FMDQ, forex turnover rose from $175.1 million recorded on Tuesday to $308.92 million on Wednesday, 15th September 2021.

Cryptocurrency watch

The crypto market posted positive gains with increased positive sentiments from investors, despite the downturn recorded in the previous week. The crypto market capitalisation gained 57.06 billion on Wednesday to close at $2.197 trillion. This represents a 2.67% appreciation compared to the previous trading session.

The positive movement in the market was largely due to the gain recorded by the world’s most popular crypto asset, Bitcoin which gained 2.4% to close at $48,232.8. In the same vein, Ethereum recorded a 3.79% gain to close at $3,566.18. XRP gained 2.34% to close at $1.12189.

A recent report by a major blockchain research and analytics firm, Chainalysis shows that the adoption rate of Bitcoin in Africa is the highest globally. According to the report, “Africa has the smallest cryptocurrency economy of any region we study, having received $105.6 billion worth of cryptocurrency between July 2020 and June 2021, but despite that it’s also one of the most dynamic and exciting.”

The report also highlighted that in addition to being the third-fastest growing cryptocurrency economy, Africa also has a bigger share of its overall transaction volume made up of retail-sized transfers than any other region at just over 7%, versus the global average of 5.5%.

Crude oil price climbs over $75 per barrel

The crude oil market traded bullish on Wednesday, recording significant gains as Brent Crude surpassed the $75 per barrel ceiling, having gained 2.62% to close at $75.53 per barrel.

In the same vein, WTI Crude gained 3.05% to close at $72.61%, while Natural gas gained 3.8% to close at $5.46.

The rally in the crude oil market came on the back of the forecast on the demand of crude oil made by OPEC on Monday. According to OPEC, oil demand worldwide is expected to jump by around 4.2 million bpd in 2022 compared to 2021, representing an upward revision of 900,000 bpd compared to the previous month’s assessment.

Meanwhile, the total global oil demand remained unchanged at 96.7 million bpd in 2021 according to OPEC’s report, it however revised Q4 2021 demand to 99.7 million bpd from 99.82 million bpd outlined in August 2021.

External reserve

Nigeria’s foreign reserve rose by $80.15 million to close at $35.19 billion on Tuesday, 14th September 2021, compared to $35.11 billion recorded as of the previous day. The latest increase represents a 0.23% boost in the country’s foreign reserve.

The reserve has now gained $1.17 billion in the month of September, reducing the year-to-date loss to about $184.46 million compared to $35.37 billion recorded as of 31st December 2020.

The recent increases which have continued for 15 consecutive days are in line with recent reports which had suggested that Nigeria’s foreign reserve position could grow as high as $40 billion by the end of September 2021.

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