Brent Crude Oil Prices Hit 2-Year High
Oil prices rose by 1 percent early on Monday, driven by expectations that recovering demand with summer travel and reopening economies will easily accommodate the gradual increase in OPEC+ production. But oil prices rose even more sharply on Tuesday, with Brent topping $71 per barrel, the highest level in more than two and a half years.
A Look at Nigeria’s External Reserve
Nigeria’s external reserve dropped by $13.26 million on Monday, 31st May 2021 to stand at $34.23 billion, representing a 0.04% decline when compared to $34.24 billion recorded as of Friday, 28th May 2021. Nigeria’s foreign reserve has lost about $1.14 billion year-to-date, having recorded consecutive declines since 19th April 2021.
BDC Operators Move to Crash Exchange Rate, Ban Street Hawking of Dollars
Forex traders under the aegis of the Association of Bureau De Change Operators of Nigeria (ABCON) have said they will start what it called ‘Operation No Street Trading’ to stop the hawking of foreign exchange by BDC operators. This is part of the measures aimed at bringing down the exchange rate which has been on the rise recently especially after the adoption of the NAFEX rate as the new official rate by the Central Bank of Nigeria.
Naira Depreciates Further Against The Dollar
The Central Bank of Nigeria (CBN) again weakened the naira on Wednesday June 2. 2021, by adjusting the local currency’s official rate from N410/$1 to N410.22 per dollar. The apex bank had initially weakened the naira official rate to N410 per dollar on May 25, 2021 from the previous rate of N379/$1, as part of its efforts to unify the country’s multiple currency regime toward a single exchange-rate system for the local currency.
In the past week, the Nigerian Treasury Bills (“NT-Bills”) secondary market closed on a bearish note as investors sold off to position in the Primary Market Auction (“PMA”) that took place on Wednesday, 26-May-21 to seek higher yields. The bearish sentiment can also be attributed to the low liquidity level in the market. Consequently, the average yield across all maturities improved by 34bps W-o-W (Week-On-Week) from 5.76% in the previous week to close at 6.10% on Friday.
The FGN Bond secondary market recorded some sell-offs as liquidity levels remain pressured and investors positioning to seek higher yields in the market. Consequently, the average yield in the market improved slightly by 8bps W-o-W to 12.52% from the previous 12.44%. Specifically, the average yield on short-tenured instruments advanced the most by 37bps W-o-W to settle at 10.06%.
Available data on abokiFX.com, a website that collates parallel market rates in Lagos, showed that Naira depreciated against the U.S. dollar at the parallel market on Thursday. The data posted showed that the naira closed at N499.00 at the black market. This represents N1.00 or 0.20 per cent devaluation from N498.00 the rate it exchanged hands with the greenback currency in the previous session on Wednesday.
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