Naira crashes to N495/$1 at black market

Thursday, May 27th, 2021: At the Importers and Exporters window, where forex is officially traded, the exchange rate between the naira and the US dollar closed at N411/$1.

On Thursday, the Naira strengthened against the US dollar at the official NAFEX window, closing at N411 per dollar. When compared to the N411.50/$1 recorded on Wednesday, May 26th, 2021, this represents a 0.12% increase.

The Naira, on the other hand, fell to a nearly three-and-a-half-year low on the parallel market, closing at N495/$1 on Thursday, May 27, 2021. When compared to the N493/$1 recorded the day before, this shows a N2 decrease.

After CBN adopted the NAFEX rate as the new official exchange rate, Naira fell to a near three-and-a-half-year low on the black market, and the country’s external reserve fell by N987.1 million in about six weeks.

The naira hit N500 to a dollar on the black market in November, according to Reuters, a three-and-a-half-year low.

Speculation based on the CBN’s adoption of the NAFEX rate drives exchange-rate movement on the black market.

NAFEX Trade Window

On Thursday, the Naira appreciated against the US dollar in the Investors and Exporters window, closing at N411/$1, up 50 kobo from the previous day’s close of N411.50/$1.

On Thursday, May 27th, 2021, the opening indicative rate closed at N411.08 to a dollar, up 30 kobo from the previous close of N411.38 to a dollar on Wednesday, May 26th, 2021.
During intra-day trading, the highest rate of N420.25 to a dollar was recorded before it settled at N411/$1. During intra-day trading, it was also sold for as little as N400/$1.
On Thursday, May 27, 2021, forex turnover at the Investors and Exporters (I&E) window fell by 25.7 percent.
Forex turnover fell from $471.85 million on Wednesday, May 26th, 2021 to $350.65 million on Thursday, May 27th, 2021.

Cryptocurrency

Bitcoin, the world’s most valuable cryptocurrency, fell by 2.05 percent to $37,792.31 on Thursday evening, losing over $870 in the previous 24 hours.

The bearish market sentiment is weakening, according to blockchain data, as oversold bitcoin may be able to establish a foothold above $40,000.
Since reaching a low of $30,000 on May 19, 2021, Bitcoin has been steadily rising.
Ether, the cryptocurrency linked to the Ethereum blockchain network, fell 3.12% to $2,688.37 on Thursday evening, losing more than $83 in the previous 24 hours. Its trading volume increased as well.

Crude oil

Brent crude closed at $69.62, up by 0.23 percent, on Thursday evening, as prices moved closer to the $70 mark.

OPEC and its allies are expected to proceed with their May-July plan to improve productivity and ease oil production cuts by 840,000 barrels per day (BPD) in July by the end of next week. In total, OPEC+ is expected to return to the market in July with up to 2.1 million BPD.
OPEC and its allies, as well as forecasters and analysts, expect the market to absorb the additional barrels despite the resurgence of COVID in major oil-importing markets in Asia such as India and Japan.
Crude markets have so far been able to absorb the extra barrels, with prices in London last week rising above $70 a barrel for the first time in two months. Brent futures have since eased slightly, owing to concerns about India’s latest virus outbreak.

External reserve

Nigeria’s external reserve fell another $19 million on Wednesday, May 26th, 2021, to $34.268 billion.

The country’s foreign reserve fell by 0.06 percent from $34.287 billion on Tuesday, May 25, 2021 to $34.268 billion on Wednesday, May 26, 2021.
Nigeria’s foreign reserve has decreased by $987.1 million since April 16, 2021, when the decline began, and has decreased by about $1.106 billion year-to-date.
Despite recent increases in the crude oil market and the apex bank’s various policies aimed at increasing dollar inflow and remittances into the country, the external reserve continues to decline.
The drop could be attributed to reports of a drop in crude oil exports to India, Nigeria’s largest buyer and a country still reeling from the Covid-19 pandemic.