See why Naira is falling to record low at black market as dollar supply drops significantly by 62%
The exchange rate between the naira and the US dollar closed at N411.63/$1 at the Investors and Exporters window, where forex is traded officially.
Naira appreciated against the US dollar to close at N411.63/$1 on Monday, representing a 37kobo gain when compared to N412/$1 recorded at the close of trading on Friday, 27th August 2021.
However, the naira further depreciated at the parallel market as it closed at N527/$1 on Monday, 30th August 2021, representing a N3 drop when compared to N524/$1 recorded on the previous trading day.
The naira slumped to a new record low against the dollar at the black market on Monday days after the CBN banned microfinance banks from foreign exchange transactions as dollar supply drops significantly by 62%.
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According to Reuters, the stoppage of forex allocation to BDC operators by the CBN has drained liquidity in the black market and could further weaken the naira.
Trading at the official NAFEX window
The naira appreciated against the US dollar on Monday 30th August 2021 to close at N411.63 to a dollar, representing a 0.27% depreciation compared to N412/$1 recorded in the previous trading day.
The opening indicative rate closed at N411.93/$1 on Monday, August 30, as against N411.80/$1 recorded on Friday, representing a 13 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 62.2% on Monday, 30th August 2021.
According to data from FMDQ, forex turnover declined from $216.52 million recorded on Friday to $81.81 million on Monday, 30th August 2021.
The world’s most popular and largest cryptocurrency, Bitcoin, was down by 2.03% on Monday evening to trade at $47,040.42 as cryptocurrency investors are pushing alternatives to Bitcoin and Ether to new heights amid a climb in downloads for crypto trading apps.
Cryptocurrency prices continue to be in the red on August 31. The global cryptocurrency market cap is $1.98 trillion, a 5.19% decrease over the last day, while the total crypto market volume over the last 24 hours is $103.08 billion, which makes a 14.10% increase.
Meanwhile, anti-Bitcoin protests broke out in El Salvador as Bitcoin law is set to kick off in less than a week with citizens not entirely convinced about it.
The second-largest cryptocurrency by market capitalization, Ethereum, was up by 2.41% in price to trade at 3,237.43 while XRP slumped by 0.85% to trade at $1.11.
Crude oil price
Brent Crude oil was down 0.04% on Monday evening to trade at $73.38 per barrel after rising earlier in the day as hurricane Ida shut 95% of US Gulf coast oil output.
The Kuwaiti oil minister said that crude oil prices could rise further if OPEC+ stops adding barrels to global supply, which is a possibility after the cartel’s next meeting.
OPEC+ had agreed to boost oil production by 400,000 bpd every month beginning August until the group’s combined output reached pre-agreement levels towards the end of next year.
But now that demand concerns are once again coming to the fore, OPEC+ is signalling that it is always ready to change track.
The West Texas Intermediate (WTI) was down by 0.04% to close at $69.18 per barrel on Monday evening, 30th August 2021, after rising earlier in the day.
Natural gas was down by 0.26% to trade at $4,294, Bonny Light Crude closed the day on a positive note as it gained 1.27% to close at $70.02 while OPEC Basket was up by 1.03% to close at $71.48.
Nigeria’s foreign reserve rose by $91 million as it recorded its third increase in over 2 weeks to close at $33.662 billion on Friday, 27th August 2021, compared to $33.571 billion recorded as of the previous day. The latest increase represents a 0.27% boost in the country’s foreign reserve.
In the same vein, the reserve level has also gained $259 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 $1.891 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.