Naira Crashes Despite Rise In Dollar Supply

Naira depreciated against the US Dollar at the NAFEX window to close at N409.75 to a dollar.

OnyxNews Nigeria reports that the exchange rate between the naira and the US Dollar closed at N409.75/$1 at the Investors and Exporters window on Friday, 25th March 2021.

Naira depreciated against the US Dollar on Thursday, 25th March 2021 after witnessing two consecutive gains at the NAFEX window to close at N409.75 to a dollar.

This represents a 0.24% decline, when compared to N408.75/$1 recorded on Wednesday, 24th March 2021.

However, in the parallel market, the naira remained relatively stable, as it closed at N486/$1, which is the same as recorded in the previous trading session.

Forex turnover on the other hand jumped by 394.4% from $34.76 million recorded on the previous day to $171.85 million as oil price continues its bearish trend.

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Trading at the official NAFEX window

Naira depreciated against the US Dollar at the Investors and Exporters window on Thursday to close at N409.75/$1. This represents a N1 decline when compared to N408.75/$1 recorded on Wednesday, 24th March 2021.

The opening indicative rate closed at N409.21 to a dollar on Thursday. This represents an 80 kobo gain when compared to N409.78/$1 recorded on Tuesday.

Also, an exchange rate of N411.4 to a dollar was the highest rate recorded during intra-day trading before it closed at N409.75/$1. It also sold for as low as N393/$1 during intra-day trading.

Forex turnover at the Investor and Exporters (I&E) window increased significantly by 394.4% on Thursday, 25th March 2021.

A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover increased from $34.76 million recorded on Wednesday, March 24, 2021, to $171.85 million on Thursday.

Cryptocurrency watch

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Bitcoin, the most priced and popular cryptocurrency in the world gained 2.03% in the early hours of Friday morning to trade at $52,355.45 after enduring a massive decline on Wednesday and Thursday trading.

Ethereum also gained 2.11% to trade at $1,619.72 as of 4:38 am on Friday.

The digital assets had witnessed bearish trading after the chairman of US Federal Reserve stated that bitcoin and other crypto assets are really not useful as a store of values.

Meanwhile, a major South Korean Bank, BNK Busan has revealed plans to offer banking services for cryptocurrency exchanges.

The bank is currently researching how other financial institutions already in the business of crypto deal with the exchanges amid forthcoming regulation.

Oil price persistent fall

Oil prices fell further on Thursday as a result of new coronavirus restrictions across major countries in Europe.

Brent Crude as of 4.59 am traded at $62.45 per barrel, a significant variance from the projected $70 per barrel made by Goldman Sach for the first quarter.

The prices of crude continue to dip further despite a tanker mishap in the Suez Canal, which blocked tanker traffic between Wednesday and Thursday.

Brent slipped by about 4% during intra-day trading on Thursday while WTI Crude fell by 4.58% during the same period as fear of a resurgent coronavirus in Europe dampened demand for crude oil in the market.

Brent ($62.45), WTI crude ($59.19), Bonny Light ($60.31), OPEC Basket ($61.61), and Natural Gas ($2.561).

External reserve records 4 consecutive days increase

Nigeria’s external reserve increased by 0.07% on Wednesday 24th, March 2021 to stand at $34.62 billion.

This represents the fourth consecutive day increase, gaining a total of $206.4 million from $34.42 billion recorded as of March 18, 2021 to $34.62 billion as of 24th March 2021.

Nigeria’s reserve had lost $957.26 million year-to-date before recording increases in the past four days, which indicates that the recent oil price rally is beginning to reflect in the country’s foreign reserve.

It is important for Nigeria that the increase continues as it will help the Central Bank stabilise the exchange rate against other currencies and meet up with pent-up obligations due to the lockdown embarked on in 2020.