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Naira Takes Another Tumble, Falls At Black Market As Dollar Supply Drops Drastically By 18.14%

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The exchange rate between the naira and the US dollar on Thursday, 5th August 2021, closed at N411.25/$1 at the official Investors and Exporters window.

Naira appreciated against the US dollar to close at N411.25/$1 on Thursday, representing a 0.06% gain when compared to N411.50/$1 recorded on the previous day.

However, naira depreciated at the parallel market to close at N508/$1 on Thursday, August 5, 2021, having traded at N506/$1 the previous day. This represents a N2 drop when compared to the previous day’s rate.

The local currency weakened at the black market as dollar supply dropped by 18.14%.

The forex market appears to be stabilizing after the initial panic due to the CBN’s decision to stop allocating foreign exchange to Bureau De Change (BDC) operators.

Trading at the official I&E window

Naira appreciated against the US dollar at the Investors and Exporters window on Thursday to close at N411.25/$1, this represents a 25 kobo gain when compared to N411.50/$1 recorded on Wednesday.

The opening indicative rate closed at N411.40/$1 on Thursday, 5th August 2021, this represents a 6 kobo drop when compared to the N411.34/$1 that it closed at on Wednesday, 4th August 2021.

An exchange rate of N413 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.25/$1, while it sold for as low as N400/$1 during intra-day trading.

Meanwhile, forex turnover at the Investors and Exporters (I&E) window dropped by 18.14% on Thursday, 5th August 2021.

According to data tracked by Nairametrics from the FMDQ, forex turnover declined from $126.92 million recorded on Wednesday, 4th August 2021 to $103.90 million on Thursday, August 5, 2021.

Cryptocurrency watch

The world’s most popular and largest cryptocurrency, Bitcoin, rose by 2.95% on Thursday evening to close at $40,955.75 after initially sliding by 6.1% early on Thursday.

The supportive comments from billionaire Elon Musk and Ark Investment Management LLC’s Cathie Wood, as well as speculation over Inc.’s possible involvement in the cryptocurrency sector, had helped Bitcoin rally in recent days.

U.S. Securities and Exchange Commission Chair Gary Gensler signalled that regulators may be more open to a Bitcoin ETF if it were based around futures rather than the cryptocurrency itself.

Meanwhile, Ether, the second-largest cryptocurrency by market capitalization, was in the spotlight on Thursday as the latest hard fork upgrade, which was dubbed “London,” officially activated on the Ethereum blockchain network

The upgrade contributed to bullish price action as Ether rose about 5% over the past 24 hours, compared with a 3% rise in bitcoin during the same period.

Ether was initially steady after the London hard fork was activated, but it started rallying about an hour later. Ethereum, was up by 1.60% to trade at $2,763.99 at the time of writing this report.

Crude oil price

Oil prices made a rebound on Thursday with Brent crude rising by 1.29% to close at $71.29 per barrel as a broader market rebound outweighs the Delta variant spread.

Oil rose for the first time this week as traders weighed the continuing spread of the delta variant against strong equity markets.

The Chinese government has imposed new restrictions and traders are weighing the risk implications of the deadly strain of the coronavirus in other regions.

The Director for crude oil at Black Diamond Commodities LLC in Houston said that they are seeing buyers return to the market because of bullish macro market sentiments like the rise in equities.

The WTI Crude rose by 0.04% to trade at $69.12 per barrel on Thursday, Natural gas recorded a 0.41% gain in price to trade at $4,157. The Bonny Light was down by 1.64% to trade at $70.07 per barrel.

External reserve

Nigeria’s foreign reserve increased by $28 million on Wednesday, 4th August 2021 to close at $33.540 billion compared to $33.512 billion recorded as of 3rd August 2021.

Since the reserve started moving positively, it has gained over $446.1 million in just 22 days despite enduring a significant plunge in the previous months.

Recall that the Central Bank of Nigeria banned the sale of foreign exchange to Bureau De Change (BDC) operators in the country, due to reports of the operators’ illegal trading of the dollar, trading beyond the limit threshold of $5,000 and gradually dollarizing the Nigerian economy, according to the CBN governor.

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