The Nigerian economy is increasingly dollarized but there is a way-out
Monday, 28th June 2021: The exchange rate between naira and the US dollar closed at N411.08/$1 at the official forex market.
Naira appreciated against the US dollar to close at N411.08/$1 on Monday, representing a 0.09% gain compared to N411.67 to a dollar recorded on Friday, 25th June 2021.
On the other hand, the exchange rate at the parallel market depreciated by 0.4% to close at N502/$1 compared to N500/$1 recorded the previous day. Also, Nigeria’s forex reserve continues to plunge as it dipped about $27.29 million on Friday, 25th June 2021.
Trading at the official NAFEX window
Naira remained appreciated against the US dollar at the Investors and Exporters window on Monday to close at N411.28/$1 from N411.67/$1 recorded at the end of the previous week.
The opening indicative rate appreciated by 47 kobo to close at N411.08 to a dollar on Monday, 28th June 2021, as against N411.55/$1 recorded on Friday, 25th June 2021.
An exchange rate of N420.9 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.28/$1, while it sold for as low as 400/$1 during intra-day trading.
Forex turnover at the Investors and Exporters (I&E) window declined by 12.3% on Monday, 28th June 2021.
The highly sought after crypto-asset also recorded a gain of 0.12% to trade at $34,528.29 despite the growing regulatory scrutiny that cryptocurrencies have encountered in the past few weeks.
Last week, China issued crypto mining bans in prominent regions of the country, while the People’s Bank of China called for a prompt check and disablement of client accounts engaging in cryptocurrency transactions.
A number of crypto asset firms are beginning to abandon attempts to register with Britain’s financial regulator as global scrutiny of the crypto market intensifies.
Recall, that on Friday last week, the Financial Conduct Authority (FCA) banned one of the world’s biggest crypto exchanges, Binance from conducting any regulated activity in Britain.
Ethereum recorded a 1.01% gain to trade at $2,103.44 as of 4:57 am on Tuesday morning.
Crude oil price
Crude oil prices dipped in the early hours of Tuesday, due to rising cases of the covid-19 in Asia and ahead of the coming OPEC+ meeting.
Brent Crude dipped 0.64% to trade at $74.2 per barrel, having witnessed significant gains in recent weeks. Recall that Brent Crude topped $76 per barrel last week, bringing its year-to-date gain to around 50%.
The sharp decline was attributed to the fear rising from the new variant of the covid-19 in Europe and the surge in cases recorded in Asia.
Moscow and St. Petersburg both reported on Monday their highest death toll, yet, as the Delta variant represents about 90% of all new cases recorded.
Due to the new variant, tighter restrictions are being implemented in Moscow, such as sending a portion of non-vaccinated employees home and denying entry to non-vaccinated citizens into their restaurants.
Meanwhile, natural gas jumped to its highest in over two years amid the expectation of increased demand for electricity in the US as a result of the hot weather.
As of 4:36 am on Tuesday, WTI slumped by 1.82% to trade at $72.7, Bonny Light recorded a decline of 1.13% to trade at $74.24 per barrel.
External reserve
Nigeria’s external reserve plunged further on Friday, 25th June 2021, by $27.29 million to close at $33.52 billion. This represents a 0.08% decline compared to the $33.55 billion recorded the previous day.
Nigeria’s foreign reserve fell to its lowest position since October 2017, as its year-to-date decline hits $1.85 billion, while its month-to-date decline stands at $709.24 million.
Despite the recent bullish trend recorded in the oil market, Nigeria’s external reserve continues to plunge. The decline may be attributed to reduced forex earnings, especially from crude oil export due to the cut in production quota.
