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Naira slumps at official market despite 7.5% rise in forex liquidity

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Monday, 16th August 2021: The exchange rate between the naira and the US dollar closed at N411.67/$1 at the official Investors and Exporters window.

Naira depreciated against the US dollar to close at N411.67/$1 on Monday, representing a 0.21% drop when compared to the N410.80/$1 that was recorded the previous trading day.

However, the naira still remained stable at the parallel market to close at N515/$1 on Monday, August 16, 2021. This was the same rate that it traded the previous trading day.

The local currency slumped at the official market as demand pressure persists despite a 7.5% increase in forex liquidity.

Trading at the official I&E window

Naira depreciated against the US dollar at the Investors and Exporters window on Monday to close at N411.67/$1. This represents an 87 kobo drop when compared to the N410.80/$1 that was recorded on Friday, August 13, 2021.

The opening indicative rate closed at N411.42/$1 on Monday, 16th August 2021, representing a 15 kobo drop when compared to the N411.27/$1 that it closed at on Friday, 13th August 2021.

An exchange rate of N415 to a dollar was the highest rate recorded during intra-day trading, before it settled at N411.67/$1, while it sold for as low as N400/$1 during intra-day trading.

Meanwhile, forex turnover at the Investors and Exporters (I&E) window rose by 7.5% on Monday, 16th August 2021.

According to data tracked by Nairametrics from the FMDQ, forex turnover increased from $109.03 million recorded on Friday, 13th August 2021 to $117.17 million on Monday, August 16, 2021.

Cryptocurrency watch

The world’s most popular and largest cryptocurrency, Bitcoin, was down by 3.29% to trade at $46,115.99 on Monday evening bringing a pause to its recent rally.

Bitcoin traded in a choppy range on Monday as buyers appear to be exhausted ahead of the $50,000 resistance level.

On Monday, the total crypto market cap surpassed $2 trillion for the first time since mid-May, according to CoinMarketCap data.

Ether and Cardano are standouts in the recent crypto rally, with strong rallies month to date, rising 26% and 62% respectively, compared with a 16% rise in Bitcoin during the same period. XRP is also up 70% so far this month.

Meanwhile, Walmart Inc. is looking to hire a cryptocurrency expert to develop blockchain strategy, joining a growing number of major corporations exploring the viability of digital currencies such as Bitcoin.

The second-largest cryptocurrency by market capitalization, Ethereum, was down by 3.98% on Monday evening to trade at $3,165.06 at the time of writing this report.

Crude oil price

Oil prices steadied after a 3-day slide that was driven by the growing threat to demand from the spread of the delta coronavirus variant with Brent crude rising by 0.04% to trade at $69.54 on Monday evening.

Oil prices had earlier dropped by over 2% early on Monday, as weak data about China’s economy and ultra-low U.S. consumer confidence weighed on the immediate global oil demand outlook.

The American headline crude, WTI, traded near $67 after losing almost 3% over the previous three sessions.

US gasoline consumption fell for a third week, according to a survey by Descartes Labs, while data from China revealed a slowdown in economic activity in the world’s biggest oil importer in July. Meanwhile, demand in India, another key consumer, is largely holding up.

After a blistering rally in the first half, crude’s advance has been checked in July and August. The delta variant has spurred fresh curbs on mobility in many nations including China, harming energy consumption.

While demand has been challenged, OPEC and its allies including Russia have stayed the course in relaxing the output curbs imposed in the early phase of the pandemic.

WTI Crude was up by 0.15% on Monday evening to trade at $67.39 per barrel after dropping earlier in the day, Natural gas recorded a 0.25% drop in price to trade at $3,936. Bonny Light was down by 2.08% to trade at $68.31 per barrel.

External reserve

Nigeria’s foreign reserve dropped marginally by $5 million on Friday, 13th August 2021 to close at $33.579 billion compared to $33.584 billion recorded as of 12th August 2021.

Since the reserve started moving positively, it has gained over $485.1 million in 30 days, despite enduring a significant plunge in the previous months.

Recall that the Central Bank of Nigeria banned the sale of foreign exchange to Bureau De Change (BDC) operators in the country, due to reports of the operators’ illegal trading of the dollar, trading beyond the limit threshold of $5,000 and gradually dollarizing the Nigerian economy, according to the CBN governor.

Source:Nairametrics.com

Rebroadcasted:Okwosi Esther

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