Naira closed flat as the Omicron Covid variant pushes crude oil prices below $70.
Naira closed flat against the US dollar again on Wednesday at N415.07/$1, the same as recorded in the past five trading sessions. This is despite trading as high as N457.02 during the intra-day session, representing the highest rate on record. FOREX liquidity at the official market improved by 45.9% to $223.18 million from $152.98 million recorded in the previous day.
On the other hand, naira depreciated further against the US dollar on Wednesday, falling by 0.35% to close at N572/$1 from N570/$1 that was recorded in the previous trading session. This is according to information obtained from BDC operators.
Nigeria’s foreign reserve reduced by 0.07% on Tuesday, 30th November to close at $41.19 billion compared to $41.22 billion recorded as of the previous day. The recent decline in the nation’s external reserve is attributed to the intervention by the apex bank in the official forex market.
Trading at the official NAFEX window
The exchange rate at the Investors and Exporters window closed flat on Wednesday at N415.07/$1, the same as recorded in the past five trading sessions. Meanwhile, it had depreciated in the previous week from N414.8/$1 to N415.07/$1 but has since maintained the same rate for six straight days.
- The opening indicative rate closed at N413.79/$1 on Wednesday, which represents a 20 kobo depreciation compared to N413.59/$1 recorded in the previous trading session.
- An exchange rate of N457.02/$1 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. It is worth noting that the N457.02/$1 is the highest rate on record at the Investors and Exporters window.
- Forex turnover at the official window increased by 45.9% to $223.18 million on Wednesday.
- According to data tracked by Nairametrics from FMDQ, forex turnover at the I&E window improved from $152.98 million recorded on Tuesday 30th November 2021 to $223.18 million on Wednesday 1st December 2021.
The crypto market recorded a marginal decline on Wednesday, as a market capitalisation dropped 0.65% to close at $2.568 trillion, while the flagship crypto asset, bitcoin also dipped 0.37% to close at $56,761.39.
In the same vein, Ethereum dipped 2.21% to close at $4,528.6, while Sola recorded a 6.45% gain to close at $222.0250. Tera gained 5.72% to close at $63.0980872.
Earlier in the week, the CEO of Twitter and a bitcoin enthusiast, Jack Dorsey announced that he is stepping down from his position at Twitter. The businessman who has been known as one of the most ardent proponents of bitcoin, who also implemented a bitcoin tipping service on Twitter, will now step down from his role and to be replaced by Parag Agrawal.
According to a recent Nairametrics article, Nigerians paid 36% more to but bitcoin than the average price. The report observed that the flagship crypto asset, bitcoin, traded at a 37% premium on some P2P exchanges and other non-traditional channels (N570 to $1) when compared with the Nigerian official exchange rate (N415). This means that bitcoins were more expensive on these platforms compared to their average price on other crypto exchanges of around $57K.
Crude oil price falls below $70
The crude oil market continues to suffer from bearish sentiments caused by the new Omicron covid variant, which has pushed crude oil prices below $70 per barrel. Crude oil benchmark, Brent closed on the reds with a 0.51% decline on Wednesday to close at $68.88 per barrel.
West Texas Intermediate (WTI), also closed with a 0.92% decline at $65.57 per barrel, while Nigeria’s crude, Bonny Light closed at $69.81 per barrel, representing a 5.05% decline. In the same vein Opex Basket declined by 4.3% to close at $71.01 per barrel.
The market, which had been non-reactive to the announcement by the US government to release 50 million barrels of oil from its strategic reserve, in a bid to drive the surging price of gasoline down. However, with the new strain of the virus that has proven to be vaccine resistant, crude prices saw significant downturn in the previous week.
The Energy Information Administration also reported an inventory draw of 900,000 barrels for the week ended 26th November 2021. The agency stated that crude oil inventories in the United States remain below the 5-year seasonal average at 433.1 million barrels.
Nigeria’s external reserve dipped by 0.07% on Tuesday, 30th November 2021 to close at $41.19 billion, which represents a decline of $24.77 million compared to $41.22 billion recorded as of the previous day.
The decline in the country’s reserve level can be attributed to the continuous intervention of the apex bank in ensuring the stability of the exchange rate. The exchange rate at the official window as remained stable in the past four trading sessions.
It is worth noting that 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.
In the month of November, Nigeria’s external reserve lost $633.47 million in value as against a gain of $5.99 million recorded in the previous month and $2.76 million gain in September 2021. On a year-to-date basis, the reserve gain has reduced to $5.81 billion.