Naira depreciates at NAFEX window, diaspora remittances to hit $22 billion

Naira depreciates at NAFEX window, diaspora remittances to hit $22 billion

Tuesday, 11th May 2021: The exchange rate between the naira and the US dollar closed at N411.25/$1 at the Importers and Exporters window, where forex is traded officially.

Naira depreciated against the US dollar to close at N411.25 to a dollar on Tuesday, 11th May 2021, representing a 58 kobo drop when compared to N410.67/$1 that was recorded on Monday, 10th May 2021.

Meanwhile, the naira remained stable at the parallel market as it closed at N483/$1. This was the same rate that was recorded on Monday, May 10, 2021, as a report from Augusto Consulting Limited expects diaspora remittances to hit $22 billion by the end of 2021.

Trading at the official NAFEX window

The naira depreciated against the US dollar at the Investors and Exporters window on Tuesday to close at N411.25/$1, representing a 58 kobo drop when compared to the N410.67/$1 that was recorded on Monday.

  • The opening indicative rate closed at N410.33 to a dollar on Tuesday, 11th May 2021, representing an 8 kobo drop when compared to the N410.22/$1 recorded on Monday.
  • Also, an exchange rate of N420.23 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.25/$1. It, however, sold for as low as N395/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window rose significantly by 201.5% on Tuesday, 11th May 2021.
  • A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover increased from $32.61 million recorded on Monday, 10th May 2021 to $98.33 million on Tuesday, 11th May 2021.

Cryptocurrency watch

Bitcoin, the world’s most popular cryptocurrency, slumped significantly by 11.87% as of Tuesday evening to trade at $50,907.32

  • Bitcoin plunged as much as 15%, sinking to as low as $46,045 after Musk said he was worried over the rapidly increasing use of fossil fuels for Bitcoin mining and transactions and suspended Tesla purchases with the asset, indicating he might favor other cryptocurrencies with much lower energy usage.
  • The U.S. Securities and Exchange Commission has warned investors about Bitcoin futures risks in mutual fund investments.
  • Ethereum, the world’s second-largest cryptocurrency, dropped by 8.43% to close at $3,911.01 after it had initially traded as high as $4,382.73.

Crude oil price stalls

The oil prices dropped despite the Energy Information Administration (EIA) report of a small crude oil inventory draw of 400,000 barrels for the week to May 7 and signs of a speedy economic recovery and upbeat forecasts for energy demand

  • This compared with a draw of 8 million barrels reported for the previous week, the largest decline in U.S. crude oil stocks since January.
  • Brent Crude dropped by 0.89% on Wednesday evening to close at $68.70 compared to its closing price of the previous day’s trading session.
  • The WTI dropped by 0.94% on Wednesday evening to close at $65.46, Bonny light crude rose by 2.04% to close at $68.44, while the OPEC basket dropped by 2.39% to close at $66.57.
  • The International Energy Agency (IEA) said in its monthly report that oil demand is already outstripping supply and the shortfall is expected to widen even if Iran boosts exports.
  • Similarly, OPEC stuck to a forecast for a strong recovery in world oil demand in 2021, with growth in China and the United States outweighing the impact of the coronavirus crisis in India

External reserve

Nigeria’s external reserve plunged for the 15th consecutive day on Monday, 10th May 2021 as it dropped by about $112 million to close at $34.6 billion.

  • The nation’s foreign reserve declined from $34.717 billion recorded as of Friday, 7th May 2021 to $34.605 billion on Monday, representing a 0.32% decline.
  • Nigeria’s foreign reserve has dipped $649.36 million since 16th April 2021 to date.
  • Nigeria will hope to boosts its foreign reserve position as oil prices continue to rally high and the CBN extends its naira 4 dollar initiative.
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