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Naira falls at official forex market as finance minister hints at unified rate

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Wednesday 18th August 2021:  The exchange rate between the naira and the US dollar fell to N411.75/$1 at the Investors and Exporters window, where forex is traded officially.

Naira fell against the US dollar on Wednesday to close at N411.75/$1, representing a 0.06% depreciation compared to N411.5/$1 recorded in the previous trading session. This also represents the lowest rate in over a month at the official window.

In the same vein, naira depreciated at the parallel market to close at N517/$1 on Wednesday. This represents a 0.39% depreciation compared to N515/$1 recorded on Tuesday, 17th August 2021.

Meanwhile, the minister of finance, Zainab Ahmed hinted that the latest policy by the Central Bank of Nigeria is pushing the local currency towards a unified exchange rate. She made this known in an interactive session on the Medium Term Expenditure Framework (MTEF) organised by the House of Representatives Committee on Finance.

Trading at the official I&E window

Naira depreciated against the US dollar at the Investors and Exporters window on Wednesday to close at N411.75/$1 from N411.5/$1 recorded at the end of trade on Tuesday, 17th August 2021.

The opening indicative rate closed at N411.39/$1 which is a marginal decline compared to N411.38$1 recorded in the previous trading session.

An exchange rate of N412 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.75/$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 increased marginally by 0.2% on Wednesday, 18th August 2021.

According to data tracked by Nairametrics from FMDQ, forex turnover increased from $113.17 million recorded on Tuesday, 17th August 2021 to $113.38 million on Wednesday, 18th August 2021.

Cryptocurrency watch

The cryptocurrency market closed the day on a positive note, with a 1.22% gain in the crypto market capitalisation at $1.899 trillion, indicating a $22.8 billion gain. Despite the gain, it is still lower than the rally recorded on Monday, when the market capitalisation surpassed the $2 trillion mark.

The most valuable cryptocurrency in the market, Bitcoin gained 0.28% to close at $44,821.42, representing a +127.08 on Wednesday.

Ethereum also gained 0.58% to close at $3,029.35, while XRP recorded a 4.31% gain in price to close at $1.14518.

Meanwhile, data reported by Coinbase reveals that Ethereum trading volume in Q2 2021 was higher than that of Bitcoin for the first time ever. The company also reported $2.23 billion in revenue and $1.6 billion in net profit.

Crude oil price

The crude oil market closed at a significant loss on Wednesday, with most of the crude commodities recording decline in price, as compared to the previous trading session.

Notably, Brent Crude declined by 1.18% to close at $68.23 per barrel, sliding further down despite the prospects of hitting $80 per barrel few months ago.

Similarly, WTI Crude dipped 1.48% to close at $65.46, OPEC basket declined by 0.36% to close at $69.4 per barrel. However, Bonny Light gained 0.37% to close at $68.56 per barrel.

The U.S Energy Information Administration (EIA) has now cut its forecast for OPEC’s oil production for the remainder of the year to 600,000 barrels per day, which is lower than previous forecasts as a result of lower-than-expected ramp-up in output.

The EIA estimated that OPEC’s crude oil production would remain lower than calls on OPEC through the third quarter and fourth quarter of 2021. This quarter, demand for OPEC’s oil will exceed production by 1.0 million bpd. However, this difference will drop to 300,000 in the fourth quarter.

External reserve

Nigeria’s foreign reserve declined by $24.7 million on Monday, 16th August 2021 to close at $33.55 billion, compared to $33.58 billion recorded as of Friday, 13 August 2021. Despite the decline, which has endured for four days, it has recorded a month-to-date gain of $151.45 million.

However, an account of its year-to-date movement shows a decline of $1.82 billion compared to $35.37 billion recorded as of December 31st, 2020.

Recent reports have suggested that Nigeria’s foreign reserve position could grow as high as $40 billion by the end of September, as projected in an EFG Hermes publication.

This was made known following the $3.35 billion direct allocations to Nigeria that was approved by the International Monetary Fund (IMF), which is expected to boost the country’s FX position, while an additional planned minimum $3 billion Eurobond issuance could also see a 20% boost in the county’s reserve.

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