Naira gains at forex markets as external reserves increase by $533 million in 4 days
The exchange rate between the naira and the US dollar closed at N411.08/$1 at the Investors and Exporters window, where forex is traded officially.
Naira appreciated against the US dollar to close at N411.08/$1 on Tuesday, representing a 55 kobo gain when compared to N411.63/$1 recorded at the close of trading on Monday, 30th August 2021.
Also, the naira appreciated marginally at the parallel market as it closed at N526/$1 on Tuesday, 31st August 2021, representing an N1 gain when compared to N527/$1 recorded on the previous trading day.
The naira gained across the forex markets as the country’s external reserve increased by $533 million in just 4 days.
The CBN on Monday, ordered deposit money banks to publish on their website the names and BVN of customers who engage in fraudulent or unscrupulous practices to obtain foreign exchange.
The rising demand for foreign exchange which is also in short supply has triggered the recent fall of the local currency in the black market.
Trading at the official NAFEX window
The naira appreciated against the US dollar on Tuesday 31st August 2021 to close at N411.08 to a dollar, representing a 0.13% appreciation compared to N411.63/$1 recorded on the previous trading day.
The opening indicative rate closed at N412.04/$1 on Tuesday, August 31, as against N411.93/$1 recorded on Monday, representing an 11 kobo depreciation.
An exchange rate of N415.20 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.63/$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 dropped by 11.4% on Tuesday, 31st August 2021.
According to data from FMDQ, forex turnover declined further from $81.81 million recorded on Monday to $72.50 million on Tuesday, 31st August 2021.
Cryptocurrency watch
The world’s most popular and largest cryptocurrency, Bitcoin, was up by 0.52% on Wednesday morning to trade at $47,446.34 as the leading digital asset has consolidated between $47,000 and $50,000 in the past few weeks.
Bitcoin rose earlier on Tuesday. Partially reversing a 3.68% slide from Monday, and ended the month up by almost 14%.
Investors have started showing interest in other cryptocurrencies after recent volatility by Bitcoin and Ethereum.
Bitcoin and Ethereum rallied, but their gains were eclipsed by those made by less well-known cryptocurrencies with much slower market caps.
Ether broke above $3,400 on Tuesday for the first time since May, as the mainnet of Ethereum layer 2 scaling solution Arbitrum One, which aims to allow the network’s users to transact with lower fees, opens to the public.
The world’s second-largest cryptocurrency was recently trading at $3,412, up more than 2% over the past 24 hours.
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Crude oil price
Brent Crude oil was up by 0.64% early on Wednesday to trade at $72.09 per barrel after dropping on Tuesday as OPEC+ expects the oil market to be in deficit at least until the end of 2021 and stocks to stay relatively low until May 2022.
As oil markets prepare for the OPEC+ meeting, Hurricane Ida took 2 million barrels per day of refining capacity offline, dragging oil prices down on Tuesday.
The American Petroleum Institute (API) on Tuesday reported a large draw in crude oil inventories of 4.045 million barrels for the week ending August 27, bringing the total 2021 crude draw so far to more than 62 million barrels, using API data.
Analysts had expected a loss of 2.833 million barrels for the week. In the previous week, the API reported a draw in oil inventories of 1.622 million barrels—a loss smaller than the 2.367 million barrel draw that analysts had predicted.
Meanwhile, crude oil prices are likely to end the month lower than they started despite an interesting August with supply outages.
The West Texas Intermediate (WTI) was up by 0.67% to close at $68.96 per barrel on Wednesday morning after dropping the previous day.
Natural gas was up by 1.01% to trade at $4,421, Bonny Light Crude closed the day on a positive note as it gained 0.87% to trade at $70.63 while OPEC Basket was up by 1.03% to close at $71.48.
External reserve
Nigeria’s foreign reserve rose by $271 million as it recorded its fourth increase in over 2 weeks to close at $33.933 billion on Monday, 30th August 2021, compared to $33.662 billion recorded as of the previous day. The latest increase represents a 0.81% boost in the country’s foreign reserve.
In the same vein, the reserve level has also gained $530 million month-to-date compared to $33.403 billion recorded as of the beginning of the month.
However, its year-to-date change shows a $1.62 billion loss 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 decline in the external reserve could be attributed to the decline recorded in the global crude oil market in recent weeks.
