The Official Exchange Rate Falls When The Foreign Reserve Falls Further
Wednesday, November 24th, 2021: At the Investors and Exporters (I&E) window, where forex is transacted legally, the naira and the US dollar exchange rate closed at N415.07/$1.
Touchaheart Nigeria reports that the naira fell 0.07 percent versus the US dollar on Wednesday, closing at N415.07/$1 compared to N414.8/$1 on Tuesday, November 23rd, 2021. Similarly, foreign exchange turnover at the official window fell by 12.9 percent to $243.34 million.
Meanwhile, the naira dipped slightly in the parallel market, closing at N560/$1, down 0.18 percent from the previous trading session’s N559/$1.
Nigeria’s foreign reserve fell by 0.04 percent on Tuesday, November 23rd, to $41.35 billion, down from $41.37 billion the day before. This is largely owing to the Reserve Bank of India’s interference in the official foreign exchange market.
Trading at the official NAFEX window
The exchange rate at the Investors and Exporters window depreciated on Wednesday by 0.07% to close at N415.07/$1 from N414.8/$1 recorded at the close of the previous week. The rate had closed at N415.07/$1 on Monday as well.
The opening indicative rate closed at N413.82/$1 on Wednesday, which represents a 3 kobo marginal depreciation compared to N413.79/$1 recorded in the previous trading session.
An exchange rate of N432.28 to a dollar was the highest rate recorded during intra-day trading before it settled at N415.07/$1, while it sold for as low as N405/$1 during intra-day trading.
Forex turnover at the official window decreased marginally by 12.9% to $243.34 million on Wednesday.
According to data tracked from FMDQ, forex turnover at the I&E window dropped from $279.37 million recorded on Tuesday 23rd November 2021 to $243.34 million on Wednesday 24th November 2021.
The largest crypto asset by market capitalization, Bitcoin closed bearish on Wednesday with a 1% decline to close at $57,002.16, triggering a 1.87% decline in the total industry market capitalization to close at $2.52 trillion.
In the same vein, Ethereum lost 2.25% to close at $4,245, while Solana dipped by 7.87% to close at $204.4625. Also, Luna and Uniswap both closed at $38.57 and $20.7471, representing 9.8% and 6.63% declines respectively.
Crude oil price
The crude oil market traded in mixed positions as some of the crude products closed positive, while others closed bearish. Brent Crude closed with a 0.21% decline to $82.27 per barrel, while WTI closed at $78.39 per barrel, representing a 0.14% decline.
On the other hand, Natural Gas gained 2% to close at $5.068, while Bonny Light gained 2.14% to close at $80.84 per barrel. The Opec Basket, however, lost 1.77% to close at $78.9 per barrel. Other Nigerian crude, Brass River and Qua Iboe both gained 4.56% to close at $80.02 per barrel.
The downturn in the market came after the U.S Administration announced that it will make 50 million barrels of oil available from the Strategic Petroleum Reserve (SPR) as a move to lower the price of oil. The SPR release from the United States is being carried out in parallel with other major energy-consuming nations, including China, India, Japan, the Republic of Korea, and the United Kingdom.
Nigeria’s foreign reserve lost $19.01 million on Tuesday, 23rd November to close at $41.35 billion, representing a 0.05% decline compared to $41.37 billion recorded as of the end of the previous day. The decline is attributed to the continuous intervention of the apex bank in ensuring the stability of the exchange rate.
Meanwhile, the nation’s foreign reserve had gained $5.99 billion in the month of October, as a result of the $4 billion raised by the federal government from the issuance of Eurobond in the international debt market.
The gains recorded in the previous month is higher than the $2.76 billion gain recorded in the month of September 2021. Meanwhile, Nigeria’s reserve has now recorded a decline of $470.33 million so far in the month of November, while on a year-to-date basis, the reserves have gained $5.97 billion.