Naira gains at I&E window as foreign reserve falls to 1 year low

Wednesday, 2nd June 2021: The exchange rate between the naira and the US dollar closed at N411.06/$ at the official Investors and Exporters window.

Naira appreciated against the US dollar on Wednesday to close at N411.06 to a dollar, representing a 0.23% gain when compared to N412/$1 recorded on Tuesday, 1st June 2021.

On the other hand, the exchange rate remained stable at the parallel market, as it closed at N498/$1 on Wednesday. This is, however, a N3 depreciation compared to N495 recorded as of Monday, 31st May 2021.

Also, Nigeria’s foreign reserve fell to its lowest position in over one year, as it dipped 0.03% from $34.23 billion recorded on Monday, 31st May 2021 to $32.22 billion on Tuesday.

Trading at the official NAFEX window

Naira appreciated against the US dollar at the I&E window on Wednesday, 2nd June 2021 to close at N411.06/$1.

• The opening indicative rate, however, depreciated by 11 kobo to close at N411.22/$1 on Wednesday, as against N411.11/$1 recorded on Tuesday, 1st June 2021.
• An exchange rate of N420.47 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.06/$1, while it also sold for as low as N381.5/$1 during intra-day trading.
• Forex turnover at the Investors and Exporters (I&E) window increased by 69.2% on Wednesday, 2nd June 2021.
• Data tracked by Nairametrics from FMDQ revealed that forex turnover increased from $96.91 million recorded on Tuesday, 1st June 2021 to $164 million on Wednesday, 2nd June 2021.

Cryptocurrency watch

The crypto market ended on a bullish note on Wednesday, 2nd June 2021 as the entire crypto market capitalisation gained 3.75% to close at $1.672 trillion.

• Also, the most popular cryptocurrency in the world, Bitcoin gained 2.88% to close at $37,750, adding $1,057.24 in a single day.
• Ethereum gained 3.06% to close at $2,714.79, while XRP recorded a gain of 2.31% to close at $1.3229.
• Recall that the highly sought-after crypto asset, Bitcoin, recorded a massive selloff in the previous month where it lost close to half its value in a matter of weeks.
• Its price volatility also reached its highest in a year as the annualised 30-day volatility reached 116.62% by May 24th, which is the highest since April 10th.

Crude oil price

Crude oil continues to surpass the $70 per barrel mark as oil demand picks up.

• On Wednesday, 2nd June 2021, Brent Crude oil grew by 1.57% to close at $71.35 compared to $70.25 per barrel recorded in the previous day.
• The growth was sustained on the back of the optimism expressed by the Joint Technical Committee of the OPEC+ concerning global oil demand.
• OPEC+ officials met for a virtual meeting on Tuesday and reaffirmed their current plans to gradually increase production in July.
• Also, The American Petroleum Institute (API) on Tuesday reported a draw in crude oil inventories.  It recorded a draw of 5.36 million barrels for the week ending 28th May 2021.
• Bonny Light grew 1.45% to trade at $69.37, while natural gas closed at $3.071 $3.083, representing a 0.13% decrease.

External reserve

Nigeria’s external reserve dropped by $9.96 million on Tuesday, 1st June 2021 to stand at $34.22 billion, representing a 0.03% decline when compared to $34.23 billion recorded on Monday, 31st May 2021.

• Nigeria’s foreign reserve has lost about $1.15 billion year-to-date, having recorded declines consecutively for 29 days.
• The current position also represents the lowest level in over one year. The last time Nigeria’s foreign reserve position was this low was 7th May 2021, when it stood at $31.19 billion.
• This is despite the positive growth recently recorded in the global crude oil market, as Bonny Light crude edges closer to the $70 per barrel mark.