Naira appreciates at official market as pressure on external reserves mounts.
The exchange rate between the naira and the US dollar closed at N414.25/$1 at the official Investors and Exporters (I&E) window.
Naira appreciated against the US dollar on Wednesday to close at N414.25/$1. This represents a 0.13% gain when compared to the N414.80 that was recorded in the previous trading sessions as the pressure on the country’s external reserves continued with a decline of $157 million.
However, the naira appreciated against the US dollar on Wednesday as it closed at N572/$1. This represents a N3 gain when compared to the N575/$1 that was recorded in the previous trading session. This is according to information obtained from BDC operators interviewed by Nairametrics.
The local currency sustained its gain at the official market as the forex turnover dropped by 53% during Wednesday’s trading session.
Trading at the official NAFEX window
The exchange rate at the Investors and Exporters window appreciated to close at N414.25/$1 on Wednesday, representing a 55 Kobo gain when compared to the N414.80/$1 that was recorded at the last trading session.
The opening indicative rate appreciated to close at N413.87/$1 on Wednesday, December 15, which represents a 16 kobo gain when compared to the N414.03/$1 that was recorded in the previous trading session.
An exchange rate of N444/$1 was the highest rate recorded during intra-day trading before it settled at N414.25/$1, while it sold for as low as N405/$1 during intra-day trading.
Forex turnover at the official window dropped by 53% to trade at $177.60 million on Wednesday.
According to data tracked by Nairametrics from FMDQ, forex turnover at the I&E window declined from $377.88 million on Wednesday 15th December 2021, to $177.60 million on Wednesday 15th December 2021.
Crude oil price
Oil prices edged higher on Wednesday, rebounding from early losses as Brent Crude went up by 0.96% to trade at $74.59 per barrel after U.S. inventory data showed strong consumer demand. This is also as the Federal Reserve said it would end its pandemic-era bond purchases in March to slow rising inflation.
The Energy Information Administration reported an inventory draw of 4.6 million barrels for the week to December 10. At 428.3 million barrels, crude oil inventories remain 7% below the five-year average.
Last week’s draw compares with a modest 200,000-barrel decline in crude oil inventories for the previous week. On Tuesday, the American Petroleum Institute estimated a crude oil inventory draw of 815,000 barrels for the week to December 10.
Prices had been pressured most of the day due to ongoing concerns that supply growth will outpace demand next year and worries that COVID-19 vaccines may be less effective against the spreading Omicron variant.
The West Texas Intermediate went up by 1.13% to trade at $71.67 per barrel. Also, Natural gas went up by 2.16% to trade at $3,884 while OPEC Basket went up by 0.34% to trade at $74.28 per barrel.
On the other hand, Nigerian crude, Bonny Light dropped by 1.12% to trade at $72.69 per barrel.
Cryptocurrency watch
The world’s largest and most popular cryptocurrency, Bitcoin, went up by 2.06% to trade at $48,978.12 in the early hours of Thursday as it moved towards the $49,000 mark.
Bitcoin bounced back on Wednesday as traders reacted to the U.S. Federal Reserve’s decision to accelerate its stimulus withdrawal. Some analysts suggested the Fed decision was already priced in, which means some traders already sold long positions, which created attractive price levels for short-term buyers.
For now, crypto prices are still stabilizing after the sell-off earlier this month. Bitcoin is up about 3% over the past 24 hours, compared to a 4% rise in ether and a 14% rise in Solana’s SOL token over the same period.
Meanwhile, Ethereum, the world’s second largest cryptocurrency by market capitalization went up by 4.13% to trade at $4,025.02
External reserves
Nigeria’s external reserve dropped by 0.38% on Tuesday, 14th December 2021, to close at $40.731 billion. This represents a decrease of $157 million compared to $40.888 billion recorded as of Friday, 10th December
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.
Culled from Nairametrics.
