Naira falls to N415/$1 at official market as Vice President expressed concerns over forex policy

Wednesday, 13th October 2021:  The exchange rate between the naira and the US dollar closed at N415.10/$1, at the Investors and Exporters window, where forex is traded officially.

Naira depreciated against the US dollar on Wednesday to close at N415.10/$1, representing a 0.2% gain when compared to N414.30/$1 recorded on Tuesday, 12th October 2021.

Similarly, the exchange rate at the parallel market closed at N568/$1. This is according to information obtained by Nairametrics from BDC operators in Lagos.

The local currency weakened to a record low at the official market despite about 100% increase in dollar supply after the Vice President, Yemi Osinbajo expressed concern about the current forex policy which has created a huge arbitrage in the market.

Trading at the official NAFEX window

The exchange rate depreciated against the US dollar on Wednesday, 13th October 2021 to close the day at N415.10 to a dollar, representing an 80 kobo drop, compared to N414.40/$1 recorded on Tuesday, 12th October 2021.

The opening indicative rate closed at N413.74/$1 on Wednesday, representing a 10 kobo drop when compared to N413.64/$1 recorded the previous trading day.

An exchange rate of N419 to a dollar was the highest rate recorded during intra-day trading before it settled at N415.10/$1, while it sold for as low as N405/$1 during intra-day trading.

Meanwhile, forex turnover at the official window rose sharply by 99.9% on Wednesday, 13th October 2021.

According to data tracked by Nairametrics from FMDQ, forex turnover increased significantly from $153.39 million recorded on Tuesday to $306.77 million on Wednesday, 13th October 2021.

Cryptocurrency watch

The world’s most popular and largest cryptocurrency, Bitcoin, was up by 3.44% on Wednesday evening to trade at $57,866.36 spurred on by positive news in the crypto space, pushing BTC to a five-month high.

Cryptocurrency prices are trading mixed on October 13. The global cryptocurrency market capitalization is $2.32 trillion, a 0.08% decrease in the past 24 hours.

The total crypto market volume over the last 24 hours is $105.76 billion, an increase of 1.14% with the market dominance of Bitcoin currently at 45.79%, a decrease of 0.68% over the previous day.

Other leading cryptocurrencies have remained relatively quiet, with Ethereum (ether), Cardano (ada) and dogecoin all continuing to consolidate recent gains.

Meanwhile, the world’s second-largest cryptocurrency by market capitalization, Ethereum, was up by 4.63% on Wednesday evening to trade at $3,635.33.

Also, Nigeria traded about $32.16 million in Bitcoin in the month of September, indicating a drop compared to $44 million recorded in the previous month. The total trading volume between January and September 2021 stood at $315.76 million.

Crude oil price

The volatility of the oil market continued on Wednesday as oil prices switched between gains and losses with Brent crude going up by 0.65% to trade at $83.72 per barrel after dipping earlier in the day as OPEC cut its 2021 oil demand forecast.

OPEC expects this year’s global oil demand to grow by 5.8 million barrels per day (bpd) from the low 2020 levels, down from last month’s estimate of 5.96-million-bpd annual growth.

The downward revision of its 2021 estimate was due to lower-than-expected actual data for the first three quarters of the year and despite healthy oil demand assumptions going into the final quarter of the year.

The cartel noted that global oil demand in the fourth quarter will be driven by a seasonal increase in petrochemical and heating fuel demand, as well as the potential switch from natural gas to petroleum products due to the high gas prices.

In recent weeks, there has been growing interest in switching from gas to oil, and “Should this trend continue, fuels such as fuel oil, diesel, and naphtha could see support, driven by higher demand from power generation, refining and petrochemical use,” OPEC said.

The WTI was up by 0.66% to trade at $80.97 per barrel. The price of Natural Gas was up by 2.24% to trade at $5.715 per barrel, and Nigeria’s crude, Bonny Light was down by 0.42% to close at $82.45 per barrel.

External reserve

Nigeria’s foreign reserve gained $206 million on Tuesday, 12th October 2021 to close at $39.213 billion compared to $39.007 billion recorded as of the previous day. The latest increase represents a 0.53% increase in the country’s foreign reserve.

The reserve gained a record $2.76 billion in the month of September 2021, while the recent gain puts the year-to-date gain at $3.84 billion. It is also worth noting that Nigeria’s reserve gained over $2.42 billion in just 7 days into October 2021.

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 the reserves did not hit $40 billion as predicted in the previous month, it continues to record positive growth and could cross the predicted line by the end of the month, if it maintains this trajectory.

The reserve is further boosted by the receipt of $3.35 billion special drawing rights (SDR) allocation from the International Monetary Fund (IMF), which the Federal Government hopes to use to reduce budget deficits.

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