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Exchange rate gains at official window as dollar supply increases significantly by 115%
Samuel Oyekanmi by Samuel Oyekanmi June 30, 2021Reading Time: 3 mins read
Naira falls across forex markets as businesses resume after public holidays
Tuesday, 29th June 2021: The exchange rate between the naira and the US dollar closed at N410.83/$1 at the Investors and Exporters window.
Naira gained 0.11% against the US dollar on Tuesday to close at N410.83/$1 compared to N411.28/$1 recorded in the previous session.
The naira remained stable at the parallel market as it closed at N502 to a dollar on Tuesday, having dropped from N500/$1 the previous day. However, the dollar supply at the I&E window skyrocketed by 114.5% to stand at $215.53 million as against $100.48 million recorded on Monday.
Trading at the official NAFEX window
Naira appreciated against the US dollar at the Investors and Exporters window on Tuesday for the second consecutive trading session to close at N410.83/$1 from N411.28/$1 recorded at the end of trade on Monday, 28th June 2021.
The opening indicative rate appreciated by 7 kobo to close at N411.01 to a dollar on Tuesday, 29th June 2021, as against N411.08/$1 recorded on Monday.
An exchange rate of N420.9 to a dollar was the highest rate recorded during intra-day trading before it settled at N410.83/$1, while it sold for as low as N387.67/$1 during intra-day trading.
Meanwhile, forex turnover at the Investors and Exporters (I&E) window increased significantly by 114.5% on Tuesday, 29th June 2021.
According to data tracked by Nairametrics from FMDQ, forex turnover spiked from $100.48 million recorded on Monday, 28th June 2021 to $215.53 million on Tuesday, 29th June 2021.
The crypto market continues to recover from its recent losses, amid regulatory crackdowns in China and the UK.
Bitcoin traded higher on Tuesday, rising about 6% over the past 24 hours. Cryptocurrencies are in relief mode as selling pressure from May stabilizes in a tight range between $30,000 and $40,000.
Meanwhile, bitcoin is currently trading at $35,215.036, a 1.93% decline compared to the previous close, while Ethereum stands at $2,135 (-1.26%).
However, according to United States SEC, Morgan Stanley has gained exposure to Bitcoin (BTC) by purchasing 28,289 shares of Grayscale Bitcoin Trust (GBTC) through its Europe Opportunity Fund.
Despite the recent bearish trend, a blockchain analysis has estimated that India’s total cryptocurrency investment grew from $200 million to $40 billion roughly over the past year.
Crude oil price
The crude oil market traded bullish on Tuesday to recover some of its earlier losses, as it closed above $75 per barrel on 29th June 2021.
As of 4:31 am on Wednesday, Brent Crude was trading at $75.07 per barrel, representing a 0.41% gain compared to the previous trading session.
The rally came on the back of OPEC+ optimism that the market looks “significantly improved’ while giving a review of the oil market and future growth prospects in the meeting, which began this week.
According to the Secretary-General of OPEC, Mohammad Barkindo, “The overall brighter picture in relation to the pandemic recovery efforts has led to significantly improved oil market conditions and prospects for future growth.”
While analysts are expecting further ease in the cuts of production quota, India the world’s third-largest import of oil, called on OPEC+ to rein in the price of oil, which at $75, according to them, is challenging for price-sensitive buyers and affects their oil demand recovery.
WTI is currently trading at $73.43 (+0.62%), Natural gas at $3.716 (+2.37%) while Bonny Light at $74.61 per barrel, indicating a gain of 0.5%.
Nigeria’s external reserve dipped by $103 million on Monday, 28th June 2021 to stand at $33.42 billion. This represents a 0.31% decline compared to the $33.52 billion recorded the previous day.
The last decline represents the highest daily loss since 15th June 2021.
Nigeria’s foreign reserve fell to its lowest position since October 2017, as its year-to-date decline hits $1.96 billion, while its month-to-date decline stands at $812.3 million. This is despite the recent bullish trend recorded in the global oil market.
The decline may be attributed to reduced forex earnings, especially from crude oil export due to the cut in production quota, as well as the widening international trade deficit.