Economy

MPC May Delay Hike in Rates Until January 2019—FSDH

Published

7 years ago

20/11/2018

By Dipo Olowookere

Ahead of the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN), which kicks off tomorrow, analysts at Lagos-based FSDH Research have said the apex bank may not tamper with the monetary policy rate (MPR) until its January 2019 meeting.

Though the company noted that rising demand for foreign exchange leading to a consistent decline in the foreign reserves, and rising inflation rate were major justifications for an increase in policy rates, it maintained that the CBN may continue to use the conduct of Open Market Operations (OMO) to manage the temporary liquidity in the financial system that may affect price stability.

Business Post recalls that at its meeting in September 2018, the MPC maintained the MPR at 14 percent, with the asymmetric corridor at +200 and -500 basis points around the MPR; the Cash Reserve Ratio (CRR) at 22.50 percent and the Liquidity Ratio (LR) at 30 percent.

According to FSDH, a review of the global economy shows that global growth remains fairly strong, but trade restrictions may reduce global growth. This is according to the International Monetary Fund (IMF), which projects a global growth rate of 3.7 percent for 2018 and 2019.

The growth rate forecast is slightly lower than the growth rate projections the IMF released in July 2018. Although FSDH Research notes that despite the recent drop in the price of crude oil on the international market, the moderately strong global growth should sustain global crude oil prices around $70/b in the short-term.

FSDH Research says it expects the Federal Open Market Committee (FOMC) of the US Federal Reserve to raise the Federal Funds Rate (Fed Rate) by 0.25 percent when the committee meets in December 2018.

The October 2018 US unemployment rate at 3.7 percent (lower than the target of 6.5 percent), inflation rate of 2.5 percent (higher than the target of 2 percent) and the growth of 3.5 percent in the economy all support arguments for an interest rate increase.

The investment firm said an increase in the Fed Rate may further place additional demand pressure on foreign exchange in Nigeria and possibly increase capital flight from emerging markets. Thus, a rate cut in Nigeria is not appropriate under these situations.

It said the short-term forecast for the Nigerian economy shows that economic growth remains fragile. The IMF forecasts growth rates of 1.9 percent and 2.3 percent in 2018 and 2019 respectively. These growth rates are lower than the Nigerian population growth rate. Thus, the economy needs policy stimulus to record a growth rate that is inclusive. Nevertheless, monetary policy easing in the form of an interest rate cut may not stimulate growth. Appropriate fiscal measures and incentives that will improve the ease of doing business in Nigeria will lay strong foundation for sustainable growth.

The Purchasing Managers’ Index (PMI) survey published by the CBN for the month of October 2018 expanded at a faster rate. FSDH Research attributes the expansion in the PMI to the increased economic activities that are usually associated with the last quarter of the year.

FSDH Research said it observed a consistent drawdown in the external reserves in order to maintain foreign exchange rate stability in Nigeria.

The CBN increased the supply of foreign exchange at the Investors’ and Exporters’ Foreign Exchange Window and increased the yield at the OMO to dowse demand pressure at the foreign exchange market.

Consequently, the drawdowns from the external reserves continued until November 2018. CBN remained the largest supplier of foreign exchange at the I & E window in the last three months.

FSDH Research noted that an attractive Nigerian Treasury Bill (NTB) yield around the current level of 16 percent may help to attract foreign portfolio investment and reduce capital flight.

Nevertheless, there is a need for deliberate fiscal measures and engagements that will promote non-oil exports that attract foreign investment into Nigeria and will guarantee foreign exchange stability.

The inflation rate increased to 11.28 percent in September 2018, the second increase since January 2017, principally due to the increase in the Food Index.

FSDH Research says it expects inflation rate to increase marginally to 11.34 percent in October and to end the year 2018 at 11.7 percent.

It said an increase in food prices, electioneering spending, and a possible increase in the minimum wage, are potential factors that will influence the direction of the inflation rate in the next three months.

Despite the expected rise in the inflation rate, it will be difficult for a hike in the interest rate to stem the rising inflation rate, as the cause of the rising inflation rate is not within the scope of monetary policy.

According to FSDH, the MPC may deal with the possible negative impact of an increase in the minimum wage at its January 2019 meeting. Thus a hold decision may be appropriate.

Data from the CBN shows that the key monetary aggregates in the country are below the target the CBN sets for the country. This development supports an argument for an expansionary policy to boost credit creation.

However, the current structural rigidities in the economy do not support strong credit growth. Therefore, unconventional policies are required to boost credit creation and business expansion to stimulate growth.

Measures that remove the risks inherent in the economy will encourage credit expansion and this will support sustainable growth.

Economy

NASD Unlisted Security Index Crosses 4,000-point Benchmark Again

Published

2 hours ago

25/04/2026

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange achieved a milestone on Friday, April 24, 2026, after five securities on the platform helped with a 1.85 per cent growth.

Data showed that the NASD Unlisted Security Index (NSI) again crossed the 4,000-point benchmark yesterday.

The index chalked up 73.64 points during the trading day to close at 4,052.59 points compared with the preceding session’s 3,978.95 points, while the market capitalisation added N5.38 billion to finish at N2.424 trillion versus Thursday’s closing value of N2.380 trillion.

The price gainers were led by Okitipupa Plc, which grew by N25.00 to sell at N305.00 per share compared with the previous price of N280.00 per share. Central Securities Clearing System (CSCS) Plc gained N6.92 to close at N76.26 per unit versus N69.34 per unit, Afriland Properties Plc appreciated by N1.00 to N17.00 per share from N18.00 per share, FrieslandCampina Wamco Nigeria Plc improved by 55 Kobo to N99.55 per unit from N99.00 per unit, and Food Concepts Plc increased by 5 Kobo to N2.70 per share from N2.65 per share.

However, there was a price loser, MRS Oil, which dipped by N21.75 to N195.75 per unit from N217.50 per unit.

During the final session of the week, the value of securities jumped 75.2 per cent to N41.3 million from N23.6 million units, and the number of deals expanded by 62.9 per cent to 44 deals from 27 deals, while the volume of securities declined marginally by 0.9 per cent to 447,403 units from 451,522 units.

At the close of trades, Great Nigeria Insurance (GNI) Plc was the most traded stock by volume (year-to-date) with 3.4 billion units worth N8.4 billion, trailed by Resourcery Plc with 1.1 billion units valued at N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units traded for N1.2 billion.

GNI was also the most active stock by value (year-to-date) with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 59.6 million units transacted for N4.0 billion, and Okitipupa Plc with 27.8 million units exchanged for N1.9 billion.

Economy

Naira Slips to N1,358/$1 as FX Reserves, Policy Uncertainty Concerns

Published

2 hours ago

25/04/2026

Adedapo Adesanya

By Adedapo Adesanya

It was not a good day for the Nigerian Naira in the currency market on Friday, April 24, as its value depreciated against the major foreign currencies at the close of transactions.

In the Nigerian Autonomous Foreign Exchange Market (NAFEX), it lost N4.53 or 0.33 per cent against the United States Dollar yesterday to trade at N1,358.44/$1, in contrast to the N1,353.91/$1 it was exchanged on Thursday.

Equally, the domestic currency slipped against the Pound Sterling in the official market during the session by N8.14 to close at N1,834.02/£1, compared with the previous rate of N1,825.88/£1 and dropped N8.01 against the Euro to sell at N1,590.73/€1 versus N1,582.72/€1.

Also, the Naira depreciated against the US Dollar at the GTBank FX desk on Friday by N4 to quote at N1,370/$1 compared with the previous session’s N1,366/$1, and at the parallel market, it depleted by N5 to settle at N1,380/$1 versus the preceding day’s N1,375/$1.

Data published by the Central Bank of Nigeria (CBN) indicated that NFEM interbank turnover surged to N43.562 million across 68 deals, up from N28.117 million the previous day.

Despite the CBN’s reassurance that the recent drop in external reserves is not worrisome, the market remains unsettled by persistent concerns over liquidity constraints, policy transparency, and weakening confidence in Nigeria’s FX market as gross reserves continue to decline to $48.4 billion.

The outlook for the Dollar appears supported by broader macro risks, including elevated oil prices tied to the tanker traffic disruptions in the Strait of Hormuz and a continued US-Iran standoff over ceasefire negotiations.

A look at the digital currency market showed that investors are sitting on the edge as the US Dollar rebounded amid geopolitical and inflation risks despite continued inflows into US spot bitcoin Exchange Traded Funds (ETFs).

Solana (SOL) rose by 1.2 per cent to sell $86.45, Cardano (ADA) appreciated by 1.1 per cent to $0.2517, Dogecoin (DOGE) grew by 0.9 per cent to $0.0989, Ripple (XRP) improved by 0.3 per cent to $1.43, Ethereum (ETH) soared by 0.2 per cent to $2,316.83, and Binance Coin (BNB) chalked up 0.1 per cent to sell for $637.44.

However, TRON (TRX) depreciated by 1.3 per cent to $0.3235, and Bitcoin (BTC) lost 0.2 per cent to close at $77,562.27, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.

Economy

Oil Market Mixed Amid Supply Disruptions, US–Iran Peace Talk Prospects

Published

2 hours ago

25/04/2026

Adedapo Adesanya

By Adedapo Adesanya

The oil market was mixed on Friday as traders weighed supply disruptions against the potential restart of peace talks between the US and Iran that could help limit those shortfalls.

Brent crude futures settled at $105.33 a barrel after rising by 26 cents or 0.3 per cent, while the US West Texas Intermediate (WTI) crude futures traded at $94.40 a barrel after falling by $1.45 or 1.5 per cent. For the week, Brent gained about 16 per cent and WTI rose nearly 13 per cent.

Reuters reported that Iranian Foreign Minister Abbas Araqchi was expected to arrive ⁠in Islamabad late on Friday to discuss proposals for resuming peace talks with the U.S. after talks collapsed earlier this week.

Also, CNN reported that US President Donald Trump was sending special envoy Steve Witkoff and Jared Kushner to Pakistan for talks with Iran’s foreign minister.

The American President also told Reuters on Friday that Iran plans to make an offer aimed at satisfying US demands. On Thursday, he said Iran may have loaded up its weaponry “a little bit” during a two-week ceasefire, but added that the US military could eliminate it in a single day. On Wednesday, he said he would indefinitely extend the ceasefire to allow for further peace talks.

Meanwhile, navigation through the Strait of Hormuz, which before the war carried about a fifth of global oil output, remains effectively blocked.

Iran’s Islamic Revolutionary Guard Corps seized two container ships – MSC Francesca and Epaminondas – following the US’ seizure of the Iranian cargo ship Touska, putting a drastic halt to attempts to pass through the Strait of Hormuz by non-oil tankers.

The head of the International Energy Agency (IEA), Mr Fatih Birol, said that the Iran war has permanently changed the fossil fuel industry, adding that the damage to confidence in fossil fuel security is permanent, and that countries exposed to the Strait of Hormuz disruption will rethink how much geopolitical risk they are willing to embed in their energy systems.

Analysts from JPMorgan argued that prices may need to rise further to force additional demand destruction. Goldman Sachs estimates Gulf oil production is down 57 per cent from pre-war levels, which are shortage signals, not evidence of a fossil fuel system in retreat.