NAFEX exchange rate closes N400/$1 as crude oil prices maintains hot streak

Wednesday 10th February 2021: The exchange rate between the Naira and the US Dollar closed  N400/$1 at the NAFEX window where forex is traded officially.

Naira closed against the US Dollar at N400/$1, representing a 0.25% gain compared to N401/$1 recorded at the close of trade on Tuesday, 9th February 2021. This is the second straight day it is closing at N400/$1 or above.

The Naira also strengthened against the dollar in the black market to close at N478/$1 compared to N480/$1 recorded on Tuesday. 

Meanwhile, Nigeria’s external reserve dipped by 0.11% as oil prices maintained its bullish trend. 

READ: Naira gains at NAFEX window as Oil prices approach $60 mark

Trading at the official NAFEX window   

The exchange rate between the naira and dollar at the Investors and Exporters (I&E) window closed at N400/$1 on Wednesday, 10th February 2021. This represents a marginal gain of N1 (0.25%) compared to N401 recorded on Tuesday. 

• The opening indicative rate was N401.04/$1 to a dollar on Wednesday, 0.66% depreciation compared to N398.42/$1 recorded the previous day 
• The dollar sold for as high as N405 to a dollar during intra-day trading before closing at N400 to a dollar. It also sold for as low as N386/$1 during intra-day trading.   
• Recall that last week the CBN adjusted its NDF exchange rate due February 23rd to N412.14 an early signal of where the apex bank thinks the exchange rate could land. 
• Forex turnover increased by 4% at the Investor and Exporters (I&E) window to stand at $50.74 million from $49.07 million recorded on Tuesday, 9th February 2021. 

READ: Naira crashes to a 3 year low at the black market as liquidity crisis worsens 

Cryptocurrency Watch 

The price of bitcoin slumped during the day trading at $44,741.79 as of 6:00 pm on Wednesday, having enjoyed a recent run of positive performance. 

• Meanwhile, one bitcoin to naira exchange for N20, 072, 949on Wednesday 10th February 2020 compared to a day earlier when it traded for N20, 899, 988
• Twitter also revealed it might consider using bitcoin as a treasury reserve and payment options following Tesla’s announcement that it bought $1.5b worth of Crypto. Twitter says it could use it to pay the salaries of its staff.
• The deputy governor of the Bank of Canada, Tim Lane, recently revealed that the bank has accelerated plans to potentially create a digital currency.
• Lane said, “For several years, the Bank of Canada has been analyzing which circumstances might lead Canada to decide to issue a digital currency. The pandemic may bring us to a decision point sooner than we had anticipated.”

READ: More pressure on the naira as Diaspora remittances to drop by 20%

Oil prices post longest winning streak in two years 

The crude oil market extended its bullish run for the 9-straight day, being the longest streak of consecutive daily gains in two years. 

• Brent Crude oil gained 0.65% in Wednesday’strading to stand at $61.56 per barrel from $61.16 recorded on Tuesday. 
• The rise in crude oil prices could be attributed to the supply curbs from OPEC+ and Saudi Arabia as well as the recent drop in inventories. Energy Information Administration (EIA) had reported a crude oil inventory draw of 6.6 million barrels last week. 
• Meanwhile, WTI closed at $58.58(+0.29%), OPEC Basket at $28 (+1.17%) while Bonny Light closed at $61.37 (+3.21%).  
• It is worth noting that Nigeria’s Minister of State, Petroleum Resources, TimipreSylva said on Tuesday that the federal government has set a target of $10 or less per barrel production cost for Nigeria’s oil industry. 

READ: External reserves hit $42 billion, highest in 5 years

External reserve on a decline despite rallying oil prices 

• Nigeria’s external reserve stood at $35.89 billion as of Tuesday 9th February 2021, indicating a 0.11% decline when compared to $35.93 billion recorded as of Monday 8th February 2021. 
• The foreign reserve has recorded a steady decline since the 25th of January 2021, despite the positive growth recorded in the global oil market. 
• Meanwhile, Nigeria needs external reserves to hit $40 billion if it is to adequately meet some of the pent-up demand that has piled up since 2020 as a result of the oil price war and covid-19 lockdown.