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Naira sustains gain at official market as forex liquidity rises sharply by 189%

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Naira to dollar exchange

Friday, 8th October, 2021: The exchange rate between the naira and the US dollar closed at N414.30/$1, at the Investors and Exporters window, where forex is traded officially.

Naira appreciated again against the US dollar on Friday, for the second time last week to close at N414.30/$1, representing a 0.09% gain compared to N414.67/$1 recorded on Thursday, 7th October, 2021.

Similarly, the exchange rate at the parallel market closed at N570/$1, the same that it traded the previous day. This is according to information obtained by Nairametrics from BDC operators in Lagos. The local currency gained at the official market as dollar supply improved significantly by 189%.

Trading at the official NAFEX window

The exchange rate appreciated against the US dollar on Friday, 8th October 2021 to close the day at N414.30 to a dollar, representing a 37 kobo gain compared to N414.67/$1 recorded on Thursday, 7th October 2021.

The opening indicative rate closed at N414.44/$1 on Friday, representing a 24 kobo drop when compared to N414.2/$1 recorded the previous trading day.

An exchange rate of N416 to a dollar was the highest rate recorded during intra-day trading before it settled at N414.30/$1, while it sold for as low as N404.60/$1 during intra-day trading, a point higher than that recorded in the previous trading day.

Meanwhile, forex turnover at the official window rose sharply by 189.1% on Friday, 8th October 2021.

According to data tracked by Nairametrics from FMDQ, forex turnover increased from $124.35 million recorded on Thursday to $359.48 million on Friday, 8th October 2021.

Cryptocurrency watch

The world’s most popular and largest cryptocurrency, Bitcoin, was down by 0.01% on Sunday evening to trade at $54,847.55.

Bitcoin price on Thursday reached $55,000 for the first time in 5 months. After a poor show in September, Bitcoin returned to the $50,000-mark at the starting of last week. The world’s largest cryptocurrency by market capitalisation is now just about $10,000 away from the all-time-high price it touched in April this year.

Analysts often find it hard to pin a single event behind Bitcoin’s volatile price surge or drop.

The global cryptocurrency market capitalisation increased 2.97% to reach $2.29 trillion. The market volume climbed 32.48% to $147.59 billion in the last 24 hours, a whopping rise in the last few months.

Meanwhile, the world’s second-largest cryptocurrency by market capitalization, Ethereum, dropped by 5.22% on Sunday evening to trade at $3,396.

Nairametrics had reported that the flagship cryptocurrency, Bitcoin had reclaimed the trillion-dollar asset status it lost after the May 2021 crash, which was caused by China’s ban on cryptocurrencies and cryptocurrency mining activities.

Meanwhile, 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

Crude oil prices continued their rebound as the WTI steadied near the psychological $80 per barrel mark as a global power crunch rattled the market while OPEC+ output has been slow to ramp up.

Brent Crude was up by 0.47% on Sunday evening to close at $82.78 per barrel, the WTI also gained 0.86% to close at $79.89 per barrel. In the same vein, the price of Natural Gas increased by 2.32% to close at $5.694 per barrel, and Nigeria’s crude, Bonny Light was up by 1.29% to close at $82.18 per barrel.

From Asia to Europe, the prices of heating fuels such as coal and natural gas are surging as stockpiles run low ahead of the winter season, prompting a switch to products such as diesel and kerosene.

Crude has gained more than 60% this year, as the roll-out of Covid-19 vaccines lifted movement curbs and, subsequently, oil demand.

Meanwhile, an anonymous source said that OPEC+ was considering a production boost by more than the 400,000 bpd monthly that the oil cartel agreed to earlier this year.

External reserve

Nigeria’s foreign reserve gained $192 million on Thursday, 7th October 2021 to close at $38.184 billion compared to $37.992 billion recorded as of the previous day. The latest increase represents a 0.51% 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 $2.81 billion. It is also worth noting that Nigeria’s reserve has gained over $1.39 billion in just 4 days into October 2021.

The recent increase in the reserve position, which has continued since 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 deficit.

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