Economy

After Recession: A Need for Policy Change?

Published

8 years ago

26/09/2017

We expect the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to hold rates at the current levels, while the fiscal authority continues to implement policy measures to sustain growth. The MPC is scheduled to meet on September 25 and 26, 2017.

The current tight monetary policy is justified in order to curb the high inflation rate and maintain stability in the foreign exchange (FX) market.

At its July 2017 meeting, the MPC maintained the Monetary Policy Rate (MPR) at 14%, with the asymmetric corridor at +200 and -500 basis points; Cash Reserve Requirement (CRR) and Liquidity Ratio (LR) at 22.50% and 30% respectively.

In the international scene, the International Monetary Fund (IMF) in its World Economic Outlook, July 2017 edition, forecasts global economic growth at 3.5% in 2017. The IMF indicated that the risks around the global growth forecast are from monetary policy normalisation in some advanced economies, notably the U.S, anti-globalisation stance, and geopolitical tensions.

The Federal Open Market Committee (FOMC) of the United States (U.S) Federal Reserve (The Fed) maintained the Federal Funds Rate (The Fed Fund Rate) at its September 2017 meeting but signalled unwinding of balance sheet as from October 2017.

At the domestic level, the Q2, 2017 figures from the National Bureau of Statistics (NBS) shows that the GDP in Nigeria recorded a growth rate of 0.55%. The recovery in crude oil production and price and the introduction of the Investors’ and Exporters’ Foreign Exchange Window (I&E Window), increased the supply of foreign exchange, and helped to pull the economy out of recession.

Meanwhile, the accretion to the external reserves continued after the MPC meeting in July 2017. The 30-Day moving average external reserves increased by 3.21% to $31.83bn as at 31st August

2017, from $30.84bn as at 31st July 2017.

However, the value of the Naira recorded a mixed performance but has shown relative stability since the last MPC meeting in July 2017. The value of the Naira depreciated in the official market, while it closed unchanged in the parallel market. The premium between the inter-bank and parallel markets averaged about N61 between the last MPC meeting in July 2017 and September 15, 2017 from an average of N66 during the period between the MPC Meetings of May and July 2017.

The monetary aggregates as at July 2017 show that the annualised growth rate in money supply is below the target that the CBN sets for the year 2017. The broad money supply (M2) decreased by 5.08% to N22.20trn in July 2017, from N23.39trn in December 2016. This is lower than the CBN’s growth rate target of 10.29% for the year 2017.

The CBN has maintained tight monetary policy to curb high inflation rate and ensure FX stability.

Our forecast shows that the inflation rate will remain in the range of 15.55%-16.20% between September 2017 and December 2017.

This is based on the assumption that the Federal Government of Nigeria (FGN) does not increase the price of Premium Motor Spirit (PMS) and Electricity Tariff. The forecast range is higher than the CBN’s target of 6%-9% and the growth retarding inflation benchmark of 12.5%.

The yields on NTBs decreased in August 2017, compared with the yields in July 2017. At the NTBs auction, average yield on the 91-day, 182-day and 364-day NTB dropped. The yields on the FGN Bonds that we monitored closed higher in August 2017 when compared with the yields in the preceding month. We expect the yields on the fixed income securities to drop.

This is because of the stability in the FX market, plans of the FGN to refinance part of the local debt with foreign debt and the positive GDP growth rate expected going forward.

Looking at the developments both in the domestic and international markets, a hold in rates at this meeting will be appropriate in order to sustain the current growth rate in the economy. However, the MPC may adjust the asymmetric corridor around the MPR to signify easing.

Meanwhile, fiscal measures in the forms of tax relief and tariff adjustments are required to boost economic activities.

Economy

Nigerian Stocks Close 1.13% Higher to Remain in Bulls’ Territory

Published

3 hours ago

20/12/2025

Dipo Olowookere

By Dipo Olowookere

The local stock market firmed up by 1.13 per cent on Friday as appetite for Nigerian stocks remained strong.

Investors reacted well to the 2026 budget presentation of President Bola Tinubu to the National Assembly yesterday, especially because of the more realistic crude oil benchmark of $64 per barrel compared with the ambitious $75 per barrel for 2025. This year, prices have been between $60 and $65 per barrel.

Business Post observed profit-taking in the commodity and energy sectors as they respectively shed 0.14 per cent and 0.03 per cent.

But, bargain-hunting in the others sustained the positive run, with the consumer goods index up by 3.82 per cent.

Further, the industrial goods space appreciated by 1.46 per cent, the banking counter improved by 0.08 per cent, and the insurance industry gained 0.04 per cent.

As a result, the All-Share Index (ASI) increased by 1,694.33 points to 152,057.38 points from 150,363.05 points and the market capitalisation chalked up N1.080 trillion to finish at N96.937 trillion compared with Thursday’s closing value of N95.857 trillion.

A total of 34 shares ended on the advancers’ chart, while 24 were on the laggards’ log, representing a positive market breadth index and bullish investor sentiment.

Austin Laz gained 10.00 per cent to close at N2.42, Union Dicon also jumped 10.00 per cent to N6.60, Tantalizers increased by 9.80 per cent to N2.69, Aluminium Extrusion improved by 9.78 per cent to N12.35, and Champion Breweries grew by 9.71 per cent to N16.95.

Conversely, Sovereign Trust Insurance dipped by 7.42 per cent to N3.87, Royal Exchange lost 6.84 per cent to trade at N1.77, Omatek slipped by 6.84 per cent to N1.09, Eunisell depreciated by 5.88 per cent to N80.00, and Eterna dropped 5.63 per cent to close at N28.50.

Yesterday, traders transacted 1.5 billion units worth N21.8 billion in 25,667 deals compared with the 839.8 million units sold for N32.8 billion in 23,211 deals in the preceding session, showing a surge in the trading volume by 76.61 per cent, an uptick in the number of deals by 10.58 per cent, and a shrink in the trading value by 33.54 per cent.

Economy

FrieslandCampina, Two Others Erase N26bn from NASD OTC Bourse

Published

4 hours ago

20/12/2025

Adedapo Adesanya

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.

Economy

Naira Crashes to N1,464/$1 at Official Market, N1,485/$1 at Black Market

Published

7 hours ago

20/12/2025

Adedapo Adesanya

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.