Tuesday, 6th July 2021: The exchange rate between the naira the US dollar closed at N411.45/$1 at the Investors and Exporters window, where forex is traded officially.
Naira depreciated against the US dollar on Tuesday, having lost 32 kobo to close at N411.45/$1 compared to N411.13/$1 recorded on Monday, 5th July, 2021.
The local currency weakened against the dollar at the official market while forex liquidity improved by 54.7%
Meanwhile, the naira was stable at the parallel market, as it closed at N503 to a dollar. This was the same rate that was recorded in the previous trading session. Also, Nigeria’s external reserve continues to plunge, as it heads to its lowest position in four years and a year-to-date decline of over $2 billion.
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Trading at the official NAFEX window
Naira depreciated against the US dollar at the Investors and Exporters window at Tuesday’s trading session to close at N411.45/$1 as against the N411.13/$1 recorded at the end of trade on Monday, 5th July 2021. This represents a 32 kobo drop.
The opening indicative rate remained stable to close at N411.50 to a dollar on Tuesday, 6th July 2021, the same rate that was recorded on the previous trading day.
An exchange rate of N420.86 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.45/$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 rose by 54.7% on Tuesday, 6th July 2021.
According to data tracked by Nairametrics from FMDQ, forex turnover increased from $71.55 million recorded on Monday, 5th July 2021 to $110.67 million on Tuesday, 6th July 2021.
The world’s most popular and biggest cryptocurrency, Bitcoin, was up by 1.37% on Tuesday evening to close at $34,260.60, recovering from a bearish trend after reaching a low of $33,125 before bouncing.
The total cryptocurrency market capitalization gained 2.5% on Tuesday to $1.52 trillion.
The market capitalization has been gradually growing since hitting a bottom of $1.32 trillion on June 23. The range high of $1.83 trillion was reached on June 4.
Majority of cryptocurrencies in the top-100 have grown over the past 24 hours, many even gaining double-digit percentages.
Bitcoin had fluctuated on Tuesday after China’s Central Bank and a regulator in the capital city took action against a company that was allegedly providing cryptocurrency-related services.
Meanwhile, International Blockchain Consulting (IBC) Group has responded to the Chinese government’s clampdown on cryptocurrency by closing down all of its Bitcoin and Ethereum mining facilities across China.
Ethereum, the second-largest cryptocurrency by capitalization, rose by 2.86% to close at $2,311.80.
Despite the ban on crypto transactions in Nigeria, it appears Nigerians are still very much in the business of trading in cryptos, especially Bitcoin.
According to a report from CoinDance, Nigeria traded a total of 60,215 Bitcoins worth over $566 million between 2015 and 2020, with many Nigerians now trading through P2P channels.
Crude oil prices dropped on Tuesday as the oil rally ground to a halt with Brent Crude closing at $74.87 per barrel, down by 2.97% amidst market volatility, especially due to the OPEC+ crisis.
The OPEC+ crisis sent oil prices lurching as the cartel left the market wondering whether supply would rise or fall.
Crude jumped briefly to the highest in over 6 years in New York after a bitter fight between Saudi Arabia and the United Arab Emirates blocked a production increase. Within hours, the rally had turned into a rout as traders speculated that the breakdown of talks could ultimately result in higher oil supplies.
U.S. WTI futures are retreating after reaching a record high on Tuesday morning. The OPEC+ standoff has been the latest in a string of bullish events that have sent crude prices up by almost 60% since the beginning of the year.
Meanwhile, the Joe Biden Administration has officially asked OPEC to raise production volumes after a few months of very little high-profile correspondence between Washington and Vienna.
WTI Crude gained 0.45% after dropping significantly earlier in the day to close at $73.64, Natural gas gained 1.02% to close at $3,674, Bonny Light recorded a decline of 0.60% to close at $74.16 per barrel, while OPEC basket rose by 0.70% to close at $75.71.
Nigeria’s external reserve declined by $89 million on Monday, 5th July 2021 to stand at $33.144 billion. This represents a 0.27% decrease compared to the $33.233 billion recorded on Friday.
Nigeria’s foreign reserve fell to its lowest position since October 2017, as its year-to-date decline surpassed $2 billion, while its monthly decline for June 2021 stood at $905.5 million. This is despite the recent bullish trend recorded in the global oil market.
The decline can be attributed to a drop in inflows by foreign investors and a decrease in forex earnings due to a cut in crude oil export as a result of OPEC production quota, as well as the widening international trade deficit. This invariably puts a lot of pressure on the local currency.
However, the expectation of an increase in the global demand for crude oil and the hope of a rise in production quota by OPEC could reduce the pressure on Nigeria’s external reserve.
The CBN, which operates a managed float foreign exchange system, also periodically supports the currency using the external reserves, and a lower reserve is expected to affect the currency.