Naira closes at a record low of N409/$1 at NAFEX

Monday 15th February 2021: The exchange rate between the naira and the dollar depreciated closing at N409.67/$1 at the NAFEX (I&E Window) where forex is traded officially. This is as the dollar supply dropped by 71% on Monday.

Naira closed against the US Dollar at N409.67/$1, representing a 1.24% drop compared to N404.67/$1 recorded at the close of trade on Friday, 12th February 2021. This also represents the fifth straight trading day Naira closed in the N400/$1 region.

The official exchange rate at the NAFEX (I&E) Window has now closed above N400/$1 for 5 days consecutively the first time ever, confirming yet again that the official exchange rate has crossed the N400/$1 ceiling.

At the parallel market where forex is traded unofficially, the naira remained stable closing at N473/$1 on Monday, February 15. This was the same rate that it closed on the previous trading day.

Also, Nigeria’s external reserves lost $312.5 million in 7 days as it fell to $35.804 billion as of February 11, 2021, from $36.116 billion as of February 3, 2021, according to data from CBN.

Trading at the official NAFEX window

The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N409.67/$1. This represents a N5 drop when compared to the N404.67/$1 that it closed on the previous trading day.

• The opening indicative rate closed at N405.13 to a dollar on Monday. This represents a N3.50 drop when compared to N401.63 to a dollar that was recorded the previous trading day on Friday, February 12, 2021.
• An exchange rate of N422.99 to a dollar was the highest rate during intra-day trading before it closed at N409.67 to a dollar. It also sold for as low as N390/$1 during intra-day trading.
• Forex turnover at the Investor and Exporters (I&E) window dropped by 70.8% on Monday, February 15, 2021.
• According to the data from FMDQ, forex turnover declined from $96.5 million on Friday, February 12, 2021, to $28.21 million on Monday, February 15, 2021.

Cryptocurrency Watch

The world’s largest cryptocurrency, Bitcoin, reached a new record high as it is close to breaching the $50,000 mark for the first time.

• The prices are up by some 40% in February and were about $48,000 on Monday afternoon.
• Its record-breaking rally is however regarded as less volatile than 2017.
• A single bitcoin now trades for N20.2 million up 9.3% while Ethereum trades for N747.7k up 9.69%
• The recent rise in the price of bitcoin has been attributed to its increasingly wider adoption suggesting it is going mainstream. The recent purchase of $1.5 billion worth of bitcoin by Tesla has also helped boost prices.
• Global investors are also worried that the plans by the US and other western governments to inject more stimulus into the global economy may trigger a rise in inflation.
• Thus they are fleeing to bitcoin as a hedge against inflation.

Oil price goes past $63 mark

Brent crude oil price hit $63.23, on Monday evening, the highest price since January last year as it goes past the $63 mark.

• This came as a result of output curbs from top oil producers, dropping down global inventories.
• The continuous rise in oil prices is also aided by expectations that production curbs by OPEC+ would tighten the market in the first quarter with an added boost from an arctic blast in the US reaching all the way to Texas to potentially disrupt flow from the Permian, America’s largest shale patch.
• OPEC oil output has risen for the seventh month in January after the group and its allies agreed to ease record supply cuts further, although an involuntary drop in Nigeria’s exports has limited the increase.
• Meanwhile, WTI Crude closed at $60.12 (+0.65), Bonny Light $60.77 (+0.37), and OPEC Basket $60.54 (+0.09).

Nigeria’s external reserve dips despite rallying oil prices

• The external reserve dipped further to $35.757 billion as of February 12, 2021.
• This represents a decline of 0.13% compared to $35.804 billion as of 11th February 2021.
• The foreign reserve has been on a steady decline since the 25th of January 2021, losing a total of $587 million in 15 days.
• Meanwhile, this is still an improvement on the $35.37 billion that it was as of December 31, 2020.

Nigeria also needs the external reserves to hit $40 billion if it is to adequately meet some of the pent up demand that has piled up since 2020 when oil prices crashed and the pandemic caused major economic lockdowns.