Last Updated on February 2, 2021 by Ope Quadri
Dollar to Naira Exchange Rate this week Monday, December 14, 2020, to Friday, December 18, 2020, is going to be interesting and here are the five things that could trigger a slight spike in the value of US dollar against the Nigerian Naira this week.
Last week between Monday, December 7 to Friday, December 11, 2020, the highest exchange rate of USD to Naira was N480/1USD.
It stabilised at N470/1USD at the parallel market as the week closed and started on N475/1USD at the blackmarket rate at the time of this report.
It’s another day, a new week, as such, we’re likely to see a slight change.
Here are the 5 things to watch in Dollar to Naira this week December 14, 2020
- The craze for COVID-19 Vaccine
- Hoarding by speculators ahead of Christmas
- Influence of Bitcoin Price and Usage among Nigerians
- Political factor craze for yuletide holidays
- Institutional interest boosts Naira image
Craze for COVID-19 Vaccine
Since last week, we’ve how the United States has been warming up to begin the COVID-19 vaccine massively. As you know, the U.S.A. isn’t the only country hit by the pandemic, but cases are worst in that country.
Nigeria’s Naira is pecked on the USD, the US dollar might experience a slight shock as they order the vaccine, and any shock on the USD would have a significant effect on the dependent Naira.
Two, the political elites in Nigeria are more fearful of the pandemic than most of the average and poor Nigerians (who constitute the population).
As the distribution of COVID-19 vaccine begins in the US, political elites in Nigeria might not actually wait till the first quarter of 2021 when Nigeria is expected to receive her first batch of the dose.
So, the political class to patronise the “black market” for the vaccine, not for the helpless poor Nigerians, but for the benefits of their family members.
The USD will be needed to accomplish this and it’s going to mount pressure on the Naira back home. They are also likely to patronise the USD black market here in Nigeria to accomplish their aim.
So, let’s watch out for that.
Hoarding by speculators ahead of Christmas
Christmas is a couple of days away, foreign exchange speculators are likely to engage in hoarding thereby leading to artificial scarcity at the parallel market, but I don’t really think this should be an issue if the Central Bank of Nigeria (CBN) is on top of its game.
The apex bank should closely monitor the activities of the Bureau De Change (BDC) in Nigeria and some commercial banks that hoard foreign currencies.
Influence of Bitcoin Price and Usage among Nigerians
We’ve seen in the last few weeks that more Nigerians don’t want to be left out in some of the economic benefits of the digital currencies.
During the weekend, we experienced a phenomenal price change, this time happening on Saturday and Sunday than during the week.
After a lacklustre five days’ trading, BTC/USD rallied after Friday, rising from near $18,000 to $19,400. That’s over nine million in Nigeria if you check the price of Bitcoin to Naira exchange rate in the market.
We’ve seen more crypto firms making their presence felt in the country to serve the needs of cryptocurrency enthusiasts in Nigeria. They use their Naira debit card for these services.
But a lot of other crypto traders use their Dollar debit card when they trade on the foreign crypto exchange. The more bullish the bitcoin, the more the effect it has on fiat currencies. Naira isn’t an exception.
This shouldn’t be an issue provided Nigeria’s apex bank effectively monitor compliance with its latest regulations of the forex.
But more importantly, Nigerians are likely to store the value of their money in a more profitable coin, despite the volatility of the digital coin.
The craze for foreign yuletide holidays
It’s time for the holiday! The security situation in Nigeria is precarious. Close to 700 Nigerians were abducted with 48 hours, don’t forget that the cases of kidnap is under-reported in Nigeria.
As the insecurity trend grows, the more the political class who created the menace are likely to opt to spend holidays in the UK, USA, Germany, UAE and other tourist destinations around the World.
They are likely to jettison the regulation of the CBN, well, some of them are allies to the CBN boss. Any influence they wield on the apex to meet their own demand is likely to impact the supply chain of the CBN to BDC.
The institutional interest could boost Naira
Are private businesses having more confidence in the Naira? Is the CBN creating the platform and transparent enough to build the confidence of investors in the Naira?
Confidence in the Naira means a boost for the economy as investors are most likely to reinvest the economy.
We believe that the five factors listed above will most likely determine how the Naira perform against the US dollar this week, Monday, December 14, 2020 to Friday, December 18, 2020.
What’s your take?