Naira maintains stability across forex markets as Nigerians accumulate dollars to protect wealth

Friday, 23rd April 2021: The exchange rate between the naira and the US dollar closed at N410/$1 in the Importers and Exporters window.

Naira maintained stability on Friday, at the Nigerian Autonomous Foreign Exchange (NAFEX) window, as the rate closed at N410 to a dollar, the same rate that was recorded on Thursday, 22nd April 2021.

Also, the naira remained stable at the parallel market to close at N485/$1 on Friday. This was the same rate that was recorded the previous day as Nigerians shun the naira and are accumulating foreign currencies to protect their wealth from naira volatility and inflation, according to a research paper in a journal published by the CBN.

The price of the world’s most popular digital instrument dropped on Friday, 23rd April 2021, while Nigeria’s external reserve continues to record a decline.

Trading at the official NAFEX window

The naira remained stable against the US dollar at the Investors and Exporters window on Friday to close at N410/$1, the same as recorded on Thursday.

• The opening indicative rate closed at N412.25 to a dollar on Friday, 23rd April 2021. This represents a N2.57 drop when compared to N409.68/$1 recorded on Thursday.
• Also, an exchange rate of N436.4 to a dollar was the highest rate recorded during intra-day trading before it settled at N410/$1. It also sold for as low as N394/$1 during intra-day trading.
• Forex turnover at the Investor and Exporters (I&E) window surged by 169.2% on Thursday, 22nd April 2021.
• Data from FMDQ showed that forex turnover declined from $108.04 million recorded on Thursday, 22nd April 2021, to $32.01 million on Friday.

Cryptocurrency watch

The world’s most priced digital asset plunged 6.23% on Sunday evening to trade at $47,768

• It dipped below $50k, for the first time since March as sell-offs by investors put pressure on the most sought-after cryptocurrency in the world.
• Bitcoin and other cryptocurrencies suffered hefty losses amid fears that U.S. President, Joe Biden’s plan to raise capital gains taxes will curb investment in digital assets.
• The price of bitcoin has plummeted by $15,000 from its all-time high.
• According to CoinMarketCap, other major cryptocurrencies have also experienced significant losses in recent days, with over N500 billion wiped from the market.
• Historically, Bitcoin has not stayed down for very long, and it has been known to be quite volatile and swing quickly and unexpectedly. Hence, it is hoped that the digital instrument will spring back up, in coming trading sessions.

Crude oil price

The price of crude oil recorded positive growth on Sunday, 25th April 2021.

• Brent Crude increased by 0.76% to trade at $66.11, indicating a growth of $0.50, compared to $65.61 recorded on Friday.
• WTI Crude went up by 1.16% to trade at $62.14, Bonny light rose by 0.60% to trade at $64.21 while Natural Gas currently sells for an average of $2.730.
• Oil demand is finally bouncing back but the recent spike in Covid-19 infections in India could threaten the rebound.
• Meanwhile, Libya’s crude oil production has fallen significantly after a company said it would have to reduce output by 100,000 barrels per day.
• I was reported that Libya’s National Corporation declared force majeure on exports from the port of Hariga due to lack of maintenance funds, consequently shutting down several fields and bringing the country’s production to less than 1 million barrels per day.

External reserve

Nigeria’s external reserve position dropped by 0.08% on Thursday 22nd April 2021 to stand at $35.123 billion.

• Data obtained from the Central Bank of Nigeria (CBN), revealed that Nigeria’s external reserve dipped from $35.152 billion recorded on 21st April 2021 to $35.123 billion on Thursday, April 22, 2021.
• This represents the fourth consecutive decline recorded during the week in Nigeria’s external reserve, having had 19 successive growths.
• The growth recorded was attributed to increasing global oil prices and some of the measures introduced by the CBN to boost dollar inflow in the country’s forex market, such as the naira 4-dollar scheme.