Thursday, 14th October 2021:  The exchange rate between the naira and the US dollar closed at N422.07/$1, at the Investors and Exporters window, where forex is traded officially.

Naira depreciated significantly against the US dollar on Thursday to close at N422.07/$1, representing a 1.68% drop when compared to N415.10/$1 recorded on Wednesday, 13th October 2021.

Similarly, the exchange rate at the parallel market closed at N573/$1. This is according to information obtained from BDC operators in Lagos.

The local currency weakened to a record low at the official market as forex liquidity drops significantly by 54%

Trading at the official NAFEX window

The exchange rate depreciated against the US dollar on Thursday, 14th October 2021 to close the day at N422.07 to a dollar, representing an N6.97 drop, compared to N415.10/$1 recorded on Wednesday, 13th October 2021.

The opening indicative rate closed at N413.50/$1 on Thursday, representing a 24 kobo gain when compared to N413.74/$1 recorded the previous trading day.

An exchange rate of N436 to a dollar was the highest rate recorded during intra-day trading before it settled at N422.07/$1, while it sold for as low as N404/$1 during intra-day trading.

Meanwhile, forex turnover at the official window dropped significantly by 53.7% on Thursday, 14th October 2021.

According to data tracked by Nairametrics from FMDQ, forex turnover declined from $306.77 million recorded on Wednesday to $141.94 million on Thursday, 14th October 2021.

Cryptocurrency watch

The world’s most popular and largest cryptocurrency, Bitcoin, was up by 3.52% on early on Friday to trade at $59,684.77 as it nears $60,000 with investors eyeing first US ETFs.

Bitcoin hit a six-month high early hours of Friday, approaching the record hit in April, as traders became increasingly confident that U.S. regulators would approve the launch of an exchange-traded fund based on its futures contracts.

The world’s biggest cryptocurrency hit its highest since mid-April, doubling in value this year and is near April’s record high of $64,895.

The U.S. Securities and Exchange Commission (SEC) is poised to allow the first U.S. bitcoin futures ETF to begin trading next week, Bloomberg News reported on Thursday, citing people familiar with the matter.

The cryptocurrency market is now worth more than the world’s most valuable company after bitcoin and several leading altcoins surged in price on Thursday. The global crypto market cap is now $2.37 trillion (£1.73tn), overtaking the $2.33tn market cap of Apple.

Meanwhile, the world’s second-largest cryptocurrency by market capitalization, Ethereum, was up by 5.38% on Thursday evening to trade at $3,826.07.

Also, Nigeria traded about $32.16 million in Bitcoin in the month of September, indicating a drop compared to $44 million recorded in the previous month. The total trading volume between January and September 2021 stood at $315.76 million.

Crude oil price

The volatility of the oil market continued on Thursday as oil prices with Brent crude going up by 1.01% to trade at $84.85 per barrel as natural gas shortages in Europe and Asia are boosting demand for oil.

The Energy Information Administration reported a crude oil inventory build of 6.1 million barrels for the week to October 8. At 427 million barrels, inventories are below the five-year average, but even though this has been a fact for a few weeks now, it has not stopped the climb in gasoline prices.

Gasoline inventory builds have also failed to put a lid on prices at the pump in the past couple of weeks. For last week, the EIA estimated a 2-million-barrel draw in gasoline stocks.

Benchmarks are trading at multi-year highs because of the energy crunch that has pushed the prices of all fossil fuels much higher than many expected.

Brent crude has been rising for five weeks in a row now, according to Reuters, and WTI has been recording even stronger performance, rising for seven consecutive weeks.

The WTI was up by 0.91% to trade at $82.05 per barrel. The price of Natural Gas was down by 0.84% to trade at $5.639 per barrel, and Nigeria’s crude, Bonny Light was up by 0.57% to close at $82.92 per barrel.

External reserve

Nigeria’s foreign reserve gained $207 million on Wednesday, 13th October 2021 to close at $39.42 billion compared to $39.213 billion recorded as of the previous day. The latest increase represents a 0.53% increase in the country’s foreign reserve.

The reserve gained a record $2.76 billion in the month of September 2021, while the recent gain puts the year-to-date gain at $4.26 billion. It is also worth noting that Nigeria’s reserve gained over $2.84 billion in just 8 days into October 2021.

The recent increase in the reserve position, which has continued since the 25th of August, is in line with recent reports suggesting that Nigeria’s foreign reserve position could grow as high as $40 billion by the end of September 2021.

Although the reserves did not hit $40 billion as predicted in the previous month, it continues to record positive growth and could cross the predicted line by the end of the month, if it maintains this trajectory.

The reserve is further boosted by the receipt of $3.35 billion special drawing rights (SDR) allocation from the International Monetary Fund (IMF), which the Federal Government hopes to use to reduce budget deficits.