Naira Depreciates At Official Market As External Reserves Continues Slump

Naira has depreciated at the official market as external reserves continue to slump.

 

Newsonline reports that the exchange rate between the naira and the US dollar closed at N415.07/$1 at the official Investors and Exporters (I&E) window.

 

 

ALSO: Black Market Dollar To Naira Exchange Rate Today 8th December 2021

 

This online newspaper understands that the Naira depreciated against the US dollar on Monday to close at N415.07/$1, representing a 0.02% drop compared to N415/$1 recorded in the previous trading sessions as a drop in the country’s external reserves continues with a decline of $113 million.

 

However, the naira remained unchanged against the US dollar on Tuesday as it closed at N570/$1. This was the same rate that was recorded in the previous trading session. This is according to information obtained from BDC operators interviewed by Newsonline Nigeria.

 

The local currency continued its slump at the official market as Forex turnover dropped by 34%.

Trading at the official NAFEX window

 

The exchange rate at the Investors and Exporters window depreciated by 7 kobo to close at N415.07/$1 on Tuesday, compared to N415/$1 recorded at the last trading session.

The opening indicative rate closed at N413.63/$1 on Tuesday, which represents a 22 kobo gain compared to N413.85/$1 recorded in the previous trading session.

An exchange rate of N463.10/$1 was the highest rate recorded during intra-day trading before it settled at N415.07/$1, while it sold for as low as N404/$1 during intra-day trading.

Forex turnover at the official window dropped by 34.04% to $149.01 million on Tuesday.

According to data tracked by Nairametrics from FMDQ, forex turnover at the I&E window declined from $225.94 million recorded on Monday 6th December 2021 to $149.01 million on Tuesday 7th December 2021.

 

Crude oil price

Crude oil prices steadied after a 2-day rally with the Brent crude dropping by 0.25% to trade at $75.25 per barrel after rising earlier on Tuesday as an industry report pointed to the biggest gain in stockpiles at a key U.S. storage hub since February.

The American Petroleum reported crude inventories at Cushing rose by 2.4 million barrels last week, according to people familiar with the figures. That would be a fourth weekly gain and the largest increase since the week ended Feb. 19 if confirmed by government data due later on Wednesday.

Oil prices had been up by over 3% on Tuesday in the run-up to the data release as earlier concern about the Omicron variant faded into the landscape of OPEC+’s bullish outlook that prompted the group to plan on increasing production in January by another 400,000 bpd.

U.S. crude inventories fell by 3.1 million barrels last week, the API said. That would be the largest draw since September if confirmed by the Energy Information Administration. The EIA is expected to report stockpiles fell by 1.5 million barrels, according to the median estimate in a Bloomberg survey.

The West Texas Intermediate dropped by 0.39% after rising earlier on Tuesday to trade at $71.77 per barrel. However, Natural gas was by 2.18% to trade at $3,789 while OPEC Basket dropped by 0.28% to trade at $71.41 per barrel.

On the other hand, Nigerian crude, Bonny Light dropped by 0.18% to trade at $71.13 per barrel.

External reserves

Nigeria’s external reserve dropped by 0.28% on Monday, 6th December 2021, to close at $40.972 billion. This represents a decrease of $113 million compared to $41.085 billion recorded as of the previous day.

The consistent decline that had been experienced in the country’s reserve level could be attributed to the continuous intervention of the apex bank in ensuring the stability of the exchange rate.

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 $5.74 billion.