Nigerian Naira remained unchanged against the Sterling Pounds and the United States Dollar at the official foreign exchange market on Monday.
At the Central Bank of Nigeria (CBN) manages foreign exchange section, the Naira traded at N416.22 and N546.53 against the United States Dollar and the Sterling Pounds, the same rates the local currency exchanged on March 31, 2021. Against the Euro common currency, the Naira traded at N459.9 to a Euro.
Naira remained under pressure at the unregulated foreign exchange market called the black market. The local currency exchanged at N580 to a United States Dollar.
Oil prices fell on Monday morning during the Asian trading session following a report that the United Arab Emirates and the Iran-aligned Houthi group have reached an agreement to halt military operations at the Saudi-Yemeni border.
The Houthi rebel group in Yemen has been attacking Saudi Arabia and UAE oil facilities in the last few months. A temporary suspension of military operations is expected to boost global oil support, especially with the Russian crude oil supply limited due to sanctions.
Brent crude oil dropped to $105 per barrel as of 9:49 am Nigerian time on Monday. However, Nigeria’s crude oil retail at $110 a barrel in the global market, according to the data available on the Central Bank of Nigeria’s website.
Nigeria’s foreign reserves dropped from $39.665 billion to $39.546 billion. The foreign reserves have been hovering around the same level for months despite the surge in oil prices, Nigeria’s main source of foreign revenue.
The drop in Nigeria’s foreign reserves is the reason for the persistent forex scarcity and the reduction in foreign spending on Naira cards. UBA, FirstBank and Zenith Bank have all halted international spending limits on their Naira cards.
Bitcoin and other cryptocurrencies closed lower in the last 24 hours as weak sentiment following the US Federal Reserve rates hike and the Russia-Ukraine war continues to drag on the entire cryptocurrency space.
Bitcoin dropped to $46,203.20 a coin while Ethereum, Terra and Solana shed 0.26%, 1.33% and 3.36%, respectively. XRP and Cardano gained 0.28% and 3.90%, respectively.
Naira Exchange Rate Dips at Official Market and Black Market
The Nigerian Naira opened the week lower against the United States Dollar at the Investors and Exporters (I&E) foreign exchange window now adopted as the official forex window and also at the black market.
The local currency opened at N417.30 against the United States Dollar before declining by 0.60% to close the day at N421.50/$ at the I&E window. Forex traders at the window transacted forex worth $70.68 million on Monday.
For banks and international money transfer operators, the Central Bank of Nigeria buys US Dollars at N414.75 and sells at N415.75. The apex bank buys and sells Pounds Sterling N508.2761 and N509.5016, respectively. For the European common currency, the Euro, the central bank sold it at N433.0453 and acquired it at N432.0036 a unit.
At the parallel market popularly known as the black market, the Naira was exchanged at N599 for a United States Dollar in Abuja.
Speaking on why the exchange rate is that high, Abu Abdullahi, a currency trader at Zone 4 in Abuja, said demand for the U.S. Dollar is high despite persistent scarcity.
Crude oil extended its gain in the early hours of Tuesday on optimism that China, the world’s largest importer of the commodity, would see substantial demand recovery after the latest data pointed to slowing COVID-19 infections in the hardest-hit areas.
Brent crude oil, the international benchmark for Nigerian crude oil, gained $2.69, or 2.4% to $114.24 a barrel at 5 am Nigerian time. The U.S. West Texas Intermediate (WTI) crude rose $3.71, or 3.4%, to $114.20 a barrel, Investors King understands.
“We are seeing a lot of signals that demand will start returning in that region, supporting higher prices,” said Bob Yawger, director of energy futures at Mizuho.
Finally, Bitcoin and other cryptocurrencies shake off Luna-led decline to pare losses on Tuesday. Luna Foundation Guard (LFG) announced in the late hours of Monday that it was discontinuing Luna Coin and stablecoin (UST) operations to launch a new blockchain protocol that would focus on developers and building in general.
The announcement marked the end of one of the most promising cryptocurrency projects and once again reminds the world of how vulnerable the cryptocurrency space is — regardless of what creators say.
Bitcoin gained 1.99% to $30,366 per coin while Eth, a token of Ethereum, XRP (token of Ripple) and Solana appreciated by 3.15%, 3.25% and 4.39% to close at $2,084.27, $0.431744 and $55.86, respectively.
Black Market: Dollar to Naira Exchange Rate Remains Under Pressure
1 dollar to naira today on the black market was N585 and purchased at N590 in Ibadan and Lagos
The Nigerian Naira remained under pressure against global counterparts in the Nigerian unregulated parallel market, popularly known as the black market. $1 dollar to naira today on the black market was N585 and purchased at N590 in Ibadan and Lagos.
At the Investors and Exporters’ forex window, the Dollar to Naira exchange rate dipped by 0.24% to N419 from N417.70 it exchanged on Thursday.
For the interbank market, Investors King observed that the Nigerian Naira remained largely unchanged at N415.74 against the U.S. Dollar.
Bitcoin to Naira exchange rate remained subdued as the uncertainty surrounding the cryptocurrency space surged to a record-high following about a 99% plunge in the value of Terra Luna Coin and its stablecoin, UST.
Bitcoin to Naira exchange rate dropped by 1.49% in the last 24 hours to N17.859 million. While Eth, a token of the Ethereum protocol dipped by 0.34% to N1.232 million, down from about N2 million it traded a few weeks ago.
The uncertainty in the cryptocurrency space also dragged on the Binance coin (BNB) as the coin of the world’s leading cryptocurrency exchange platform moderated to N179,834 a coin, a 0.50% decline in its value.
Luna, the cryptocurrency that once again alerted the world to the vulnerability of unregulated space, is presently trading at N0.120 per coin, down from about N57,000 it was trading a week ago.
Oil prices fell on Monday as the uncertainty surrounding China, the world’s second-largest economy, continues to drag on the commodity outlook.
Brent crude, the benchmark for Nigerian crude oil dipped by 0.7%, or 72 cents to $110.83 per barrel at 11:45 am on Monday. While the U.S. West Texas Intermediate (WTI) oil fell by 0.5%, or 58 cents to $109.91 a barrel.
The decline was a result of the prolonged COVID-19 lockdown in china. China, the world’s largest importer of crude oil, is said to have instituted lockdown restrictions in about 46 cities to curb the spreading COVID-19.
However, this lockdown has started disrupting China’s economic activity as retail sales contracted by 11% while factory production dropped by 2.9% in the month of April.
Experts are now predicting that despite Russia’s sanction, crude oil prices could drop further if the Chinese lockdown persists.
Shortage In Foreign Exchange As Naira Falls to N595 Against U.S. Dollar
Amid the scarcity of Foreign Exchange (Forex) in the country, the Nigerian Naira on Monday extended its decline to N595 against the United States Dollar on the parallel market, popularly known as the Black market.
An analysis by Investors King revealed that last week, the Naira exchanged at N590 to a U.S. Dollar on Thursday on the black market before dropping in value to N595 on Friday, the same rate it exchanged on Monday. However, the Central Bank of Nigeria (CBN) has warned against patronising that section of forex.
In 2021, the CBN stopped allocating forex to Bureau de change operators after accusing them of aiding illegal forex flows, hoarding, and speculation. All forex allocations were then appropriated to the Deposit Money Banks (DMBs), presently being accused of the same things.
To plug forex leakages and challenges, the apex bank once again declared that it will stop appropriating forex to DMBs by the end of 2022 to spur its $200 billion forex repatriation program (RT200 FX Programme).
At the 2021 Banker’s Committee, the CBN governor, Godwin Emefiele announced the ‘RT200 FX Programme, which aims to increase forex inflow into the country from non-oil sources over the next three to five years.
“After serious consideration of the various possibilities, the CBN is launching the Banker’s committee ‘RT200 FX programme’, which represents the ‘Race to $200 billion FX repatriation’, ‘effective immediately, based on available choices and extensive engagement with the financial community”, Emefiele had said.
The RT200 program is a set of policies, strategies, and programs for non-oil exports that will allow Nigeria to achieve its ambitious but doable objective of $200 billion in FX repatriation, from non-oil exports over the next three to five years.
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