Naira depreciates at official market as dollar liquidity slumps

Naira fell against the US dollar to close at N415.07/$1, representing a 0.02% depreciation compared to N414.98/$1 recorded at the close of trading activities on Monday.

On the other hand, the naira remained flat against the US dollar at the parallel market on Tuesday to close at N570/$1, the same as recorded at the close of trading activities on Monday, 1st November 2021.

Nigeria’s foreign reserve retreated for the second time in a row as it declined by $29.35 million to close at $41.79 billion as of Monday, 1st November 2021. This represents a 0.07% drop compared to $41.82 billion as of 29th October 2021.

Forex turnover at the official window depreciated significantly to its lowest level since August 20th. Forex liquidity declined by 61% on Tuesday, 2nd November 2021.

Nigeria’s foreign reserve declined for the second time in a row, having recorded continuous positive growth in the past two months. The reserve level dipped marginally by 0.07% to close at $41.79 billion as of 1st November 2021, compared to $41.82 recorded as of the previous day.

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Meanwhile, the nation’s foreign reserve gained $5.04 billion in the month of October, on the back of the $4 billion raised by the federal government from the issuance of Eurobond in the international debt market. The gains recorded in the previous month is higher than the $2.76 billion gain recorded in the month of September 2021, while the recent decrease puts the year-to-date gain at $6.42 billion.

The crude oil market started bearish on Wednesday, as Brent Crude dipped 1.02% to trade at $83.86 per barrel as the American Petroleum Institute (API) reported its sixth straight week of crude oil inventory build.

According to the API, the inventory build for crude oil was estimated to be 3.594 million barrels, from the 2.318 million barrels recorded in the previous week. Meanwhile, West Texas Intermediate declined by 1.42% to trade at $82.72 per barrel as of 6:30 am on Wednesday.

Natural gas also dipped by 0.29% to trade at $5.526 per barrel, while OPEC basket remained flat at $82.41 per barrel. Nigeria’s crude, Bonny Light also dipped 0.04% to trade at $84.3 while Brass River and Qua Iboe both gained 2.07% to trade at $84.76 per barrel.

While the reason for the recent decline still remains unclear, oil prices continue to trade above $80 per barrel at the global crude oil market.