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Naira depreciates at official window despite a 266% increase in dollar supply

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Naira depreciates at official window despite a 266% increase in dollar supply

Wednesday, 29th September 2021:  The exchange rate between the naira and the US dollar closed at N414.73/$1, at the official Investors and Exporters window.

Naira depreciated against the US dollar on Wednesday, to close at N414.73/$1, representing a 0.06% drop when compared to N414.50/$1 recorded on Tuesday 28th September 2021.

Meanwhile, the exchange rate at the parallel market closed at N574/$1 on Tuesday. This is according to information obtained by Nairametrics from BDC operators in Lagos.

The naira fell at the official market despite a massive 266.2% increase in dollar supply. The local currency is still hitting record lows against the US dollar at the black market despite the news of Nigeria’s Eurobond sales which is meant to boost the nation’s external reserves.

Nigeria, last week, sold $4 billion Eurobond after investors oversubscribed to the tune of $12.2 billion with the country’s external reserve rising by $2.3 billion in the month of September. The rise in the external reserve on the back of the Eurobond issue is likely to increase the CBN’s capacity to support the naira.

Trading at the official NAFEX window

The exchange rate depreciated against the US dollar on Wednesday, 29th September 2021 to close the day at N414.73 to a dollar, representing a 23 kobo drop when compared to N413.50/$1 recorded on Tuesday, 28th September 2021.

The opening indicative rate closed at N414.05/$1 on Wednesday, representing a 36 kobo drop when compared to N413.69/$1 recorded on Tuesday, 28th September 2021.

An exchange rate of N415.20 to a dollar was the highest rate recorded during intra-day trading before it settled at N414.73/$1, while it sold for as low as N404/$1 during intra-day trading, the same as the previous day.

Meanwhile, forex turnover at the official window rose by 266.2% on Wednesday, 29th September 2021.

According to data tracked from the FMDQ, forex turnover increased significantly from $127.68 million recorded on Tuesday to $467.56 million on Wednesday 29th September 2021.

Cryptocurrency watch

The world’s largest and most popular cryptocurrency, Bitcoin, was up by 3.35% to trade at $43,542.20 as major cryptocurrencies show signs of recovery over the last 24 hours since the ban of crypto trading by the Chinese government.

Data from CoinMarketCap revealed that the market dominance of Bitcoin was earlier on Wednesday 42.65% with an increase of 0.13% over the course of the day. Over the course of the week, Bitcoin showed a 1% increase.

The global crypto market capitalization on Wednesday stood at $1.87 trillion and it showed that it had slipped by 0.91% over the course of the last day. The total crypto market volume over the last 24 hours was $93.56 billion, which indicated that there had been a decrease of 3.88% over the same time period according to information from CoinMarketCap. The second-largest cryptocurrency by market capitalization, Ethereum, was up by 3.83% to trade at $3,031.61, while XRP was also up by 4.18% to trade at $0.958.

Crude oil price

Oil prices dropped as Brent oil dipped by 0.57% on Wednesday to trade at $78.64 per barrel as US dollar rose and after the United States government report showed crude stockpiles rose for the first time in 8 weeks.

Crude oil moved lower today after the Energy Information Administration (EIA) reported an inventory build of 4.6 million barrels for the week to September 24. This compared with a draw of 3.5 million barrels for the previous week and analyst expectations of a 2.33-million-barrel draw. A day earlier, the American Petroleum Institute reported an unexpected inventory build of 4.13 million barrels, which took some steam out of an oil price rally that pushed Brent crude over $80 a barrel—a three-year high. The rally was sparked by a gas and coal crunch that caused worry about energy supplies during the northern hemisphere winter when demand is at its highest. WTI dropped by 0.19% to trade at $74.69 per barrel, Natural Gas was down by 1.99% to trade at $5,368. The OPEC Basket rose by 0.82% to trade at $78.37 per barrel, while Nigeria’s crude, Bonny Light dropped by 0.88% to trade at $77.53 per barrel.

External reserve

Nigeria’s foreign reserve gained further by $152 million on Tuesday, 28th September 2021 to close at $36.413 billion compared to $36.261 billion recorded as of the previous day. The latest increase represents a 0.42% boost in the country’s foreign reserve and the highest level since February of the year.

The reserve has now gained $2.324 billion in the month of September 2021, while the recent gain puts the year-to-date gain at $1.038.77 billion.

The recent increase in the reserve position, which has continued since the 25th of August is in line with recent reports suggesting that Nigeria’s foreign reserve position could grow as high as $40 billion by the end of September 2021.

Although, hitting $40 billion seems unlikely but it’s a major step in the right direction especially with the oversubscription of the $4 billion Eurobond sourced by the federal government from the international debt market

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