Economy
MPC Meeting: CBN to Still Hold Interest Rate at 14%—Analysts
By Dipo Olowookere
As the Central Bank of Nigeria (CBN) holds its last Monetary Policy Committee (MPC) meeting this week, many observers are not expect any cut in the interest rate.
At the moment, the benchmark interest rate is 14 percent and it has remained so for many months.
With the inflation gradually retreating, some economic experts say a drop in the interest rate would not be a bad idea.
However, most of them are not expecting such to happen this year, probably from the first quarter of next year.
The National Bureau of Statistics (NBS) is releasing the Gross Domestic Product (GDP) for the third quarter of this year on Monday (tomorrow) and observers are a further growth in the period. The country’s GDP slightly rose by 0.55 percent in the second quarter of 2017.
Commenting on the MPC meeting that begins on Monday and ends on Tuesday, analysts at Afrinvest said they expect the committee to retain the interest rate at 14 percent.
Afrinvest’s analysts noted that, “The (MPC) meeting is coming against the backdrop of a synchronised global growth expansion, underlying recent moves by systemic central banks to begin phasing out ultra-accommodative monetary policy hitherto put in place to buoy growth, rising commodity prices and improving domestic macroeconomic conditions anchored by recovery in external sector variables.
“Despite the noticeable easing of external sector pressures and improving growth prospect, we believe that in line with outcomes of previous meetings held this year, the MPC would retain rates at current level, owing to the fragility of the economic recovery and disappointing inflation numbers witnessed so far in Q3:2017.”
For analysts at Cowry Asset, “We opine that the Monetary Policy Committee (MPC), scheduled to meet on Monday and Tuesday, October 20 and 21, 2017 respectively, will retain the benchmark interest rate, MPR, at 14 percent despite sustained moderations in inflation rate amid falling food prices, increase in global crude oil prices with attendant boost in external reserves, convergence of multiple foreign exchange rates and the return to and expected sustenance of economic growth.
“Our opinion is partly predicated on anticipated increase in public sector spending, in addition to anticipated increased seasonal household spending amid end-of-year festivities.
“A key consideration will also be likely increase in interest in the United States amid improving economic developments.
On the part of analysts at FSDH Research, “The short-term outlook of the Nigerian economy favours a monetary policy easing.
“The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) may either reduce the Monetary Policy Rate (MPR) by a few basis points or adjust the rates around the asymmetric corridor of the MPR at its meetings scheduled to hold on 20 and 21 November, 2017.
“The current tight monetary policy stance was justified in order to maintain stability in the foreign exchange market and curb the high inflation rate.
“At its September 2017 meeting, the MPC maintained the Monetary Policy Rate (MPR) at 14%, with the asymmetric corridor at +200 and -500 basis points around the MPR; retained the Cash Reserve Requirement (CRR) and Liquidity Ratio (LR) at 22.50% and 30% respectively.”
By Dipo Olowookere
It was a good day for the stock market in Nigeria as it appreciated by 0.79 per cent on Friday to bring the year-to-date return to 0.66 per cent.
This was influenced by renewed interest across most of the sectors of the market, though the insurance index declined by 2.15 per cent when trading activities ended for the session.
Business Post reports that the banking counter appreciated by 1.97 per cent, the consumer goods space grew by 0.70 per cent, the industrial goods sector gained 0.09 per cent, and the energy counter closed flat.
Yesterday, the All-Share Index (ASI) increased by 810.26 points to 103,598.46 points from the preceding day’s 102,788.20 points and the market capitalisation by N497 billion to N63.645 trillion from Thursday’s N63.148 trillion.
Chellaram was the biggest price gainer on Friday after it chalked up 10.00 per cent to trade at N4.07, Guinness Nigeria also appreciated by 10.00 per cent to N77.00, SCOA Nigeria improved by 10.00 per cent to N3.96, Transcorp Power jumped by 7.96 per cent to N349.80, and Lasaco Assurance went up by 7.19 per cent to N3.28.
Conversely, Neimeth was the biggest price loser as it shed 9.88 per cent to N3.10, John Holt declined by 9.78 per cent to N8.30, International Energy Insurance depleted by 9.74 per cent to N1.76, Sovereign Trust Insurance fell by 9.40 per cent to N1.06, and Austin Laz lost 9.00 per cent to close at N1.82.
As for the activity chart, a total of 576.4 million stocks valued at N9.0 billion in 11,546 deals compared with the 394.4 million stocks worth N22.8 billion traded in 12,160 deals in the preceding session, indicating a rise in the trading volume by 46.15 per cent, and a decline in the trading value and number of deals by 60.53 per cent and 5.05 per cent.
Secure Electronic Technology was the busiest equity with 202.2 million units worth N151.8 million, Nigerian Breweries traded 42.1 million units valued at N1.3 billion, Japaul exchanged 34.6 million units for N79.7 million, Access Holdings sold 32.2 million units valued at N807.0 million, and Sovereign Trust Insurance traded 17.0 million units worth N18.3 million.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.42 per cent gain on Friday, January 24 after three equities ended on the advancers’ chart at the close of business.
Nipco Plc gained N15.01 during the trading day to close at N165.11 per share versus N150.10 per share of the preceding session, Okitipupa Plc added N4.79 to end the session at N52.69 per unit compared with Thursday’s trading value of N47.90 per unit, and Central Securities Clearing System (CSCS) Plc expanded by 80 Kobo to trade at N24.00 per share, in contrast to the N23.30 per share it was sold a day earlier.
The gains recorded by these stocks pushed the value of the bourse higher by NN7.41 billion to N1.775 trillion from the N1.767 trillion recorded in the preceding session and the NASD Unlisted Security Index (NSI) grew by 6.93 points to wrap the session at 3,133.20 points compared with 3,120.13 points recorded in the previous session.
Yesterday, the price of FrieslandCampina Wamco Nigeria Plc went down by 92 Kobo to end the session at N38.58 per share, in contrast to the previous day’s N39.50 per share.
The volume of securities traded in the session decreased on Friday by 95.9 per cent to 16.3 million units from 407.4 million units, the value of shares traded yesterday slumped by 97.4 per cent to N10.2 million from N391.2 million units, and the number of deals declined by 23.3 per cent to 23 deals from 30 deals.
Impresit Bakolori Plc was the most active stock by value (year-to-date) with 406.5 million units worth N386.1 million, followed by FrieslandCampina Wamco Nigeria Plc with 4.3 million units valued at N170.4 million, and Geo-Fluids Plc with 9.1 million units sold for N44.3 million.
Impresit Bakolori Plc was also the most active stock by volume (year-to-date) with 406.5 million units worth N386.1 million, trailed by Industrial and General Insurance (IGI) Plc with 26.3 million units sold for N6.3 million, and Geo-Fluids Plc with 9.2 million units valued at N44.3 million.
By Adedapo Adesanya
The Naira extended its recent gaining spree by 1.12 per cent or N17.39 on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, January 24.
Yesterday, the local currency was traded in the official market at N1,531.20/$1 compared with the preceding trading day’s value of N1,548.59/$1.
The recent appreciation aligns with expectations that the Naira will appreciate in the first quarter of the year, backed by continued policy support by the Central Bank of Nigeria (CBN), with the latest being the launch of the FX Code due next week to enhance transparency in the market.
Also, the domestic currency improved its value against the Pound Sterling in the spot market on the last trading day of the week by N8.97 to quote at N1,903.24/£1, in contrast to Thursday’s exchange rate of N1,912.21/£1 and against the Euro, it gained N8.72 to finish at N1,605.17/€1 versus the preceding day’s N1,613.89/€1.
In the same vein, the domestic currency appreciated against the American Dollar in the parallel market yesterday to sell for N1,660/$1 compared with the N1,665/$1 it was traded a day earlier.
In the cryptocurrency market, there was profit-taking following earlier euphoria around US President Donald Trump’s ambitious “Stargate Project” announcement, which is a $500 billion commitment to enhancing the US AI infrastructure.
Crypto commentators believe this signals a shift toward reduced oversight with the pledge unveiled on Tuesday, bringing together tech giants OpenAI, Oracle, and SoftBank with an initial commitment of $100 billion, scaling to $500 billion over four years.
Solana (SOL) dipped by 4.9 per cent to trade at $247.14, Ethereum (ETH) dropped 2.8 per cent to $3,290.29, Dogecoin (DOGE) fell by 2.4 per cent to $0.3488, and Cardano (ADA) slid by 2.1 per cent to $0.9763.
Further, Ripple (XRP) went down by 1.9 per cent to $3.11, Binance Coin (BNB) shrank by 0.7 per cent to $687.71, and Bitcoin (BTC) declined by 0.6 per cent to $104,369.28, while Litecoin (LTC) appreciated by 3.9 per cent to $121.63, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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