Economy
LCCI Urges CBN to Leave Interest Rate at 18.75%
By Adedapo Adesanya
Ahead of next week’s Monetary Policy Committee (MPC) meeting scheduled for Monday, September 25 and Tuesday, September 26, the Lagos Chamber of Commerce and Industry (LCCI) has called on the Central Bank of Nigeria (CBN) to pause its interest rate hike.
In a statement signed by the Director-General, Mrs Chinyere Almona, the group said this was necessary to relieve Nigerians of the pressure on the supply side following a further surge in the inflation rate.
The National Bureau of Statistics (NBS) revealed last Friday that the average cost of goods and services rose by 25.80 per cent in August 2023 from 24.08 per cent in July 2023.
The CBN, at its meeting in July, raised the Monetary Policy Rate (MPR) by 25 basis points to 18.75 per cent from 18.00 per cent.
The LCCI urged the federal government to implement prudent fiscal policy measures, noting that the slow pace of headline inflation month-on-month may be an indication that the path of price movements remains unclear in the near term.
As a result, the chamber anticipates businesses will implement a variety of cost reduction strategies, including downsizing and local sourcing of input factors as they bid to lower operating expenses.
“Also, household real income will continue to experience decline, especially in the near term,” the organisation said.
It recommended that the government should implement prudent fiscal policy measures, particularly in terms of borrowings as well as address the challenge of food inflation by immediately reducing/ removing tax on basic food items to protect the most vulnerable.
“We implore the government to hasten the provision of the anticipated palliatives to lessen the impact of the rising trend in prices on economic agents,” the LCCI stated.
The chamber explained that the increased inflation rate represents 1.72 per cent points higher than the previous month and 5.28 per cent points when compared to 20.52 recorded in the corresponding month in 2022.
“On a month-month basis, inflation, however, moderately increased to 3.18 per cent, 0.29 per cent points rise compared to the 2.9 per cent surge in the previous month.
“Also, food inflation rate increased to 29.37 per cent, implying a 2.36 percentage points increase when compared to 26.98 per cent the previous month and 6.22 per cent points increase compared to 23.12 per cent points in the corresponding month in 2022.
“Similarly, core inflation increased to 21.15 per cent, 0.68 per cent points and 4.03 per cent points increase when compared to 20.47 per cent in July 2023 and August 2022, respectively.
“In terms of contributions of items, the data revealed that food and non-alcoholic beverages contributed the highest to the price increase at 13.36 per cent followed by housing water, electricity, gas and other fuel (4.32 per cent), clothing and footwear (1.97 per cent), transport (1.68 per cent) and furnishing & household equipment & maintenance (1.30 per cent),” it said.
Recall that President Bola Tinubu nominated Mr Olayemi Cardoso to take over the helm of affairs of the CBN following the ousting of embattled Mr Godwin Emefiele. While Mr Cardoso won’t take office till after September 26, the current acting CBN chief, Mr Folashodun Shonubi, will lead the meeting for a second time.
The appointment of Mr Cardoso is subject to the confirmation of the Senate, which resumes from recess next Tuesday.
By Adedapo Adesanya
Three stocks stretched the bearish run of the NASD Over-the-Counter (OTC) Securities Exchange by 1.21 per cent on Friday, December 19, with the market capitalisation giving up N26.01 billion to close at N2.121 billion compared with the N2.147 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) dropping 43.47 points to 3,546.41 points from 3,589.88 points.
The trio of FrieslandCampina Wamco Nigeria Plc, Central Securities Clearing System (CSCS) Plc, and NASD Plc overpowered the gains printed by four other securities.
FrieslandCampina Wamco Nigeria Plc lost N6.00 to sell at N54.00 per unit versus N60.00 per unit, NASD Plc shrank by N3.50 to N58.50 per share from N55.00 per share, and CSCS Plc depleted by N2.91 to N33.87 per unit from N36.78 per unit.
On the flip side, Air Liquide Plc gained N1.01 to close at N13.00 per share versus N11.99 per share, Golden Capital Plc appreciated by 70 Kobo to N7.68 per unit from N6.98 per unit, Geo-Fluids Plc added 39 Kobo to sell at N5.50 per share versus N5.11 per share, and IPWA Plc rose by 8 Kobo to 85 Kobo per unit from 77 Kobo per unit.
During the trading day, market participants traded 1.9 million securities versus the previous day’s 30.5 million securities showing a decline of 49.3 per cent. The value of trades went down by 64.3 per cent to N80.3 million from N225.1 million, but the number of deals jumped by 32.1 per cent to 37 deals from 28 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc finished the session as the most active stock by value on a year-to-date basis with 5.8 billion units valued at N16.4 billion, followed by Okitipupa Plc with 178.9 million units transacted for N9.5 billion, and MRS Oil Plc with 36.1 million units traded for N4.9 billion.
The most active stock by volume on a year-to-date basis was still InfraCredit Plc with 5.8 billion units worth N16.4 billion, trailed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.7 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Adedapo Adesanya
It was not a good day for the Nigerian Naira at the two major foreign exchange (FX) market on Friday as it suffered a heavy loss against the United States Dollar at the close of transactions.
In the black market segment, the Naira weakened against its American counterpart yesterday by N10 to quote at N1,485/$1, in contrast to the N1,475/$1 it was traded a day earlier, and at the GTBank forex counter, it depreciated by N2 to settle at N1,467/$1 versus Thursday’s closing price of N1,465/$1.
In the Nigerian Autonomous Foreign Exchange Market (NAFEX) window, which is also the official market, the nation’s legal tender crashed against the greenback by N6.65 or 0.46 per cent to close at N1,464.49/$1 compared with the preceding session’s rate of N1,457.84/$1.
In the same vein, the local currency tumbled against the Euro in the spot market by N2.25 to sell for N1,714.63/€1 compared with the previous day’s N1,712.38/€1, but appreciated against the Pound Sterling by 73 Kobo to finish at N1,957.30/£1 compared with the N1,958.03/£1 it was traded in the preceding session.
The market continues to face seasonal pressure even as the Central Bank of Nigeria (CBN) is still conducting FX intervention sales, which have significantly reduced but not remove pressure from the Naira. Also, there seems to be reduced supply from exporters, foreign portfolio investors and non-bank corporate inflows.
President Bola Tinubu on Friday presented the government’s N58.47 trillion budget plan aimed at consolidating economic reforms and boosting growth.
The budget is based on a projected crude oil price of $64.85 a barrel and includes a target oil output of 1.84 million barrels a day. It also projects an exchange rate of N1,400 to the Dollar.
President Tinubu said inflation had plunged to an annual rate of 14.45 per cent in November from 24.23 per cent in March, while foreign reserves had surged to a seven-year high of $47 billion.
Meanwhile, the cryptocurrency market was dominated by the bulls but it continues to face increased pressure after million in liquidations in previous session over accelerating declines, with Dogecoin (DOGE) recovering 4.2 per cent to trade at $0.1309.
Further, Ripple (XRP) appreciated by 3.9 per cent to $1.90, Cardano (ADA) rose by 3.5 per cent to $0.3728, Solana (SOL) jumped by 3.4 per cent to $126.23, Ethereum (ETH) climbed by 2.9 per cent to $2,982.42, Binance Coin (BNB) gained 2.0 per cent to sell for $853.06, Bitcoin (BTC) improved by 1.7 per cent to $88,281.21, and Litecoin (LTC) soared by 1.2 per cent to $76.50, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Adedapo Adesanya
Crude oil prices edged up on possible disruptions from a US blockade of Venezuelan tankers as the market waits for news about a possible Russia-Ukraine peace deal.
Brent futures rose 65 cents or 1.1 per cent to $60.47 per barrel while the US West Texas Intermediate (WTI) futures expanded by 51 cents or 0.9 per cent to $56.66 per barrel. Both Brent and WTI were down about 1 per cent this week after both crude benchmarks fell about 4 per cent last week.
US President Donald Trump said he was leaving the possibility of war with Venezuela on the table, noting that there would be additional seizures of oil tankers near Venezuelan waters after the US seized a sanctioned oil tanker off the coast of Venezuela last week.
The American President this week ordered a “blockade” of all sanctioned oil tankers entering and leaving Venezuela, in the US’ latest move to increase pressure on Nicolas Maduro’s government, targeting its main source of income. The pressure campaign on President Maduro has included a ramped-up military presence in the region and more than two dozen military strikes on vessels in the Pacific Ocean and Caribbean Sea near Venezuela, which have killed at least 90 people.
President Trump has also previously said that US land strikes on the South American country will soon start.
Meanwhile, US Secretary of State Marco Rubio on Friday said that the US is not concerned about an escalation with Russia when it comes to Venezuela, as the Trump administration builds up military forces in the Caribbean.
This development comes as President Trump seeks an end to the unending war between Ukraine and Russia that is heading towards its fourth year.
European Union leaders decided on Friday to borrow cash to loan 90 billion Euros to Ukraine to fund its defense against Russia for the next two years as Russian President Vladimir Putin offered no compromise on Friday on his terms for ending the war in Ukraine and accused the European Union of attempting “daylight robbery” of Russian assets.
Ukraine, meanwhile, struck a Russian “shadow fleet” oil tanker in the Mediterranean Sea with aerial drones for the first time.
Earlier this week, the US and Ukraine both signaled progress in negotiations about a peace agreement during talks in German capital city of Berlin. The US is now reportedly offering Ukraine security guarantees modeled on NATO’s Article 5 mutual defense pledge.
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