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Naira gains further at official market despite decline in dollar supply

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Naira gains further at official market despite decline in dollar supply

Monday, 6th September 2021: The exchange rate between the naira and the US dollar closed at N411.13/$1 indicating a further appreciation at the official Investors and Exporters window.

Naira gained against the US dollar on Monday, to close at N411.13/$1 compared to N411.5/$1 recorded at the close of trade on Friday, 6th September 2021, representing a 0.09% appreciation.

Meanwhile, the exchange rate depreciated further at the parallel market to close at N532/$1. This represents a record low compared to an average of N530 recorded in the previous trading session. The exchange rate has continuously depreciated in recent weeks, due to scarcity of forex and increased demand by importers at the black market.

Nigeria’s foreign reserves recorded a boost of $77.69 million on Friday, 3rd September to close at $34.26 billion, compared to $34.18 billion recorded a day before. The reserve position has gained $239.93 million so far in the month of September 2021.

Trading at the official NAFEX window

Exchange rate gained against the US dollar on Monday 6th September 2021 to close at N411.13 to a dollar, representing a 0.09% appreciation compared to N411.5/$1 recorded in the previous trading day.

Naira has now appreciated against the US dollar for three consecutive days.

The opening indicative rate closed at N411.82/$1, a 40 kobo depreciation compared to N411.42/$1 recorded on Friday, 3rd September 2021.

An exchange rate of N412.53 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.13/$1, while it sold for as low as N400.99/$1 during intra-day trading.

Meanwhile, forex turnover at the Investors and Exporters (I&E) window decreased by 23.5% on Monday 6th September 2021.

According to data tracked by Nairametrics from FMDQ, forex turnover dipped from $127.51 million recorded on Friday to $97.54 million on Monday 6th September 2021.

Cryptocurrency watch

The crypto market started the week on a bullish note recording gains of over $21.49 billion on Monday as positive sentiments towards Bitcoin pushed the market upward to a total market capitalisation of $2.37 trillion.

The world’s most valuable cryptocurrency asset gained 1.15% to close at $52,407.25 on Monday, 6th September 2021. However, Ethereum recorded a decline of 0.69% to close at $3,924.23.

Meanwhile, XRP gained 5.59% to close at $1.38001 on Monday.

The positive rally recorded by Bitcoin has been attributed to its adoption as a legal tender by El Salvador. There has been a growing movement on social media, calling for people to buy small amounts of Bitcoin in support of El Salvador’s plan to make the token legal tender.

Meanwhile, Nigeria is set to kick start the pilot scheme of its Central Bank Digital Currency (CBDC) known as ‘e-Naira’ on the 1st of October 2021, with the blockchain technology known as the Hyperledger Fabric Blockchain being adopted.

Crude oil closed bearish

The crude oil market started the week on a bearish note as Brent Crude oil closed at $72.22 per barrel on Monday, 7th September 2021.

In the same vein, West Texas Intermediate (WTI), also recorded a 0.76% decline in price to close at $68.76 per barrel, while Natural Gas gained about 0.36% to trade at $4.695.

Crude oil prices had surged in the previous week after Hurricane Ida damaged offshore platforms and flooded refineries during the week. During the previous week, member states at the OPEC+ meeting reiterated their commitment to the 400,000 b/d monthly increase over the rest of the month.

Meanwhile, Saudi Arabia had intercepted a ballistic missile attack on facilities owned by state oil major, Aramco in the Eastern Region. Due to this, the Aramco facilities in Dharan have been said to be on lockdown.

External reserve

Nigeria’s foreign reserve rose by $77.7 million to close at $34.26 billion on Friday, 3rd September 2021, compared to $34.18 billion recorded as of the previous day. The latest increase represents a 0.23% boost in the country’s foreign reserve.

The reserve has gained $239.93 million in the month of September and has lost a total of $1.12 billion year-to-date compared to $35.37 billion recorded as of 31st December 2021.

While recent reports have suggested that Nigeria’s foreign reserve position could grow as high as $40 billion by the end of September 2021, the recent rally could indicate we are towards hitting the projected numbers.

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