Exchange Rate Gains Marginally As Foreign Reserve Hits Highest Level In 21 Months

Thursday, 7th October 2021: The exchange rate between the naira and the US dollar closed at N414.67/$1, at the Investors and Exporters window, where forex is traded officially.

The Publisher Nigeria gathered that naira appreciated marginally against the US dollar on Thursday, for the first time this week to close at N414.67/$1, representing a 0.01% gain compared to N414.73/$1 recorded on Wednesday 6th October 2021.

Similarly, the exchange rate at the parallel market gained on Thursday to close at N570/$1 compared to N575/$1 recorded in the previous day, representing an appreciation of 0.87%. This is according to information obtained by Nairametrics from BDC operators in Lagos.

Meanwhile, Nigeria’s foreign reserve recorded a boost of $209.5 million on Wednesday, 6th October 2021 to close at $37.99 billion compared to $37.78 billion recorded as of the previous day. Nigeria’s current reserve level represents the highest since 31st January 2020.

Trading at the official NAFEX window
The exchange rate appreciated marginally against the US dollar on Thursday, 7th October 2021 to close the day at N414.67 to a dollar, representing a 0.01% gain compared to N414.73/$1 recorded on Wednesday, 6th October 2021.

The opening indicative rate closed at N414.2/$1 on Thursday, representing a 13 kobo appreciation compared to N414.33/$1 recorded in the previous trading day.

An exchange rate of N419.84 to a dollar was the highest rate recorded during intra-day trading before it settled at N414.67/$1, while it sold for as low as N405/$1 during intra-day trading, a point higher than that recorded in the previous trading day.

Meanwhile, forex turnover at the official window dipped by 53.3% on Thursday, 7th October 2021.

According to data tracked by Nairametrics from FMDQ, forex turnover decreased from $266.32 million recorded on Wednesday to $124.35 million on Thursday 7th October 2021.

Cryptocurrency watch
The cryptocurrency market on Thursday recorded a marginal gain as it closed at $2.33 trillion, representing a 0.49% gain and a $11.28 billion surplus to crypto investors. However, the flagship crypto asset, Bitcoin dipped significantly on the same day, recording 2.07% decline as of 9:33pm on Thursday. Indications show that it dipped further before the close of trade as it is currently trading below the $54,000 line.

Ethereum on the other hand recorded a 1.24% gain to close at $3,620.85 on Thursday, while USDT USD remained flat at $1.0005.

The flagship cryptocurrency, Bitcoin has now reclaimed the trillion-dollar asset status it lost after the May 2021 crash, which was caused by China’s ban on cryptocurrencies and cryptocurrency mining activities.

The report shows that the renewed bull run in the crypto asset, which saw it trade as high as $55,000 on Wednesday could be as a result of significant demand for the asset class by Whales, a term used to describe big money investors in the cryptocurrency space.

Meanwhile, Nigerian traded about $32.16 million in Bitcoin in the month of September, indicating a drop compared to $44 million recorded in the previous month. The total trading volumes between January and September 2021 stood at $315.76 million.

Crude oil price
The crude oil market made a rebound on Thursday from the bearish trade recorded on Wednesday as the United State considered releasing oil from its strategic petroleum reserve. However, as the U.S Department of Energy walked back on the comments, oil prices have begin to record positive growth.

Brent Crude gained 1.7% on Thursday to close at $82.46 per barrel, as WTI also gained 1.85% to close at $78.86 per barrel. In the same vein, the price of Natural Gas increased by 1.36% to close at $5.752 per barrel.

However, Nigeria’s crude Bonny Light traded bullish on Thursday as its price dropped by 2.12% to close at $80.34 per barrel, while other Nigerian crude Brass River and Qua Iboe both recorded 2.37% decline apiece to close at $80.64 per barrel.

The market has witnessed bullish trades since last week and more recently following the OPEC+ decision to maintain its production increases of 400,000 bpd per month. In the meeting, all participating states agreed that stocking to the initially designed course would be in the collective interest of the group.

External reserve
Nigeria’s foreign reserve gained $209.49 million on Wednesday, 6th October 2021 to close at $37.99 billion compared to $37.8 billion recorded as of the previous day. The latest increase represents a 0.55% increase in the country’s foreign reserve.

The reserve gained a record $2.76 billion in the month of September 2021, while the recent gain puts the year-to-date gain at $2.62 billion. It is also worth noting that Nigeria’s reserve has gained over $1.2 billion in just 3 days into October 2021.

The recent increase in the reserve position, which has continued since 25th of August is in line with recent report suggesting that Nigeria’s foreign reserve position could grow as high as $40 billion by the end of September 2021.

Although the reserves did not hit $40 billion as predicted in the previous month, it continues to record positive growth and could cross the predicted line by the end of the month, if it maintains this trajectory.

With the $4 billion raised by the federal government through Eurobond sourced from the international debt market, the reserve is likely to get more firepower in the coming weeks.