Economy
After Recession: A Need for Policy Change?
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.
By Adedapo Adesanya
Five securities caused the NASD Over-the-Counter (OTC) Securities Exchange to experience a setback of 0.64 per cent on Monday, February 2.
During the first trading session of February 2026, FrieslandCampinaWamco Nigeria Plc shrank by N4.46 to end at N63.54 per unit versus the previous session’s N68.00 per unit, as Okitipupa Plc depreciated by N3.83 to close at N230.77 per share versus last Friday’s N234.60 per share.
Further, Central Securities Clearing System (CSCS) dropped 50 Kobo to sell at N40.00 per unit compared with the previous closing price of N40.50 per unit, UBN Property Plc dipped by 21 Kobo to N1.99 per share from N2.20 per share, and Acorn Petroleum Plc lost 3 Kobo to end at N1.35 per unit versus N1.38 per unit.
As a result, the market capitalisation went down by N13.98 billion to settle at N2.158 trillion, in contrast to the previous value of N2.171 trillion, and the NASD Unlisted Security Index (NSI) contracted by 23.35 points to settle at 3,606.76 points compared with last Friday’s closing value of 3,630.11 points.
Amid the loss, Geo-Fluids Plc managed to finish green after it chalked up 9 Kobo to sell at N6.84 per share versus the N5.75 per share it ended in the last trading day.
Yesterday, the volume of securities traded by investors surged by 1,238.5 per cent to 3.9 million units from 287,618 units, the value of securities increased by 1,075.2 per cent to N36.0 million from N3.1 million, and the number of deals soared by 90.5 per cent to 40 deals from 21 deals.
At the close of trades, CSCS Plc remained the most traded stock by value (year-to-date) with 15.4 million units valued at N623.9 million, followed by FrieslandCampina Wamco Nigeria Plc with 1.7 million units worth N110.2 million, and Geo-Fluids Plc with 10.6 million units sold for N69.9 million.
CSCS Plc was also the most active stock by volume (year-to-date) with 15.4 million units traded for N623.9 million, trailed by Geo-Fluids Plc with 10.6 million units worth N69.9 million, and Mass Telecom Innovation Plc with 10.1 million units transacted for N4.1 million.
By Adedapo Adesanya
The value of the Naira dropped against the United States Dollar in the the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Monday, February 2 by N3.81 or 0.27 per cent to N1,390.36/$1 from the N1,386.55/$1 it traded last Friday.
This was driven by stronger demand for forex at the official market, which outweighed to what was available to meet customers’ needs. But the local currency remained within the expected trading range.
In the same market window, the domestic currency further appreciated against the Pound Sterling during the session by N6.72 to close at N1,899.51/£1 compared with the preceding session’s rate of N1,906.23/£1 and improved against the Euro by N7.70 to trade at N1,644.52/€1 versus the previous trading day’s value of N1,652.22/€1.
In the parallel market, the exchange rate of the Nigerian Naira to its American counterpart remained unchanged yesterday at N1,465/$1 and at the GTBank FX counter, it also maintained stability at N1,419/$1.
The Naira is expected to remain relatively stable in the coming days, boosted by stronger FX liquidity, enhanced price discovery, and a gradual restoration of offshore investor confidence while Nigeria’s external reserves, which provide the Central Bank of Nigeria (CBN) with the capacity to defend the Naira and stabilise the foreign exchange market, have continued to grow steadily.
Updated data showed that Nigeria’s gross external reserves printed at $46.18 billion as of January 29, 2026, reflecting an addition of $62.40 million.
As for the cryptocurrency market, it was bullish after a sharp weekend sell-off while a resurgent US Dollar index, which has logged its strongest two-day gain in nine months, threatened to keep gains in check.
Expectations that US Federal Reserve chair nominee, Mr Kevin Warsh, will be cautious on interest-rate cuts, along with upcoming US jobs data, are seen as potential drivers of further Dollar strength.
The biggest gainer for the session was Cardano (ADA), which rose by 6.2 per cent to trade at $0.2976, Ethereum (ETH) appreciated by 5.5 per cent to $2,319.80, Dogecoin (DOGE) grew by 5.3 per cent to $0.1066, Binance Coin (BNB) gained 4.8 per cent to sell for $776.00, and Solana (SOL) added 4.6 per cent to sell at $103.75.
In addition, Litecoin (LTC) improved by 4.5 per cent to trade at $59.95, Bitcoin (BTC) appreciated by 3.6 per cent to $78,445.62, and Ripple (XRP) expanded by 3.4 per cent to $1.60, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited managed to finish in the green territory on Monday after it marginally closed higher by 0.01 per cent.
The last minute escape from the bears was triggered by the gains posted by large-cap equities like Zenith Bank, Aradel Holdings and others, offsetting the losses recorded by GTCO, Oando, First Holdco and others.
According to data obtained by Business Post, only 29 stocks ended on the gainers’ chart, while 44 equities landed on the losers’ table, indicating a negative market breadth index and weak investor sentiment.
Universal Insurance rose by 10.00 per cent to sell for N1.32, Premier Paints appreciated by 10.00 per cent to N11.00, DAAR Communications improved by 9.93 per cent to N1.55, RT Briscoe increased by 9.92 per cent to N8.64, and Morison Industries advanced by 9.91 per cent to N10.98.
On the flip side, Omatek declined by 10.00 per cent to N2.70, Union Homes REIT declined by 9.96 per cent to N85.40, AXA Mansard shrank by 9.94 per cent to N14.31, Deap Capital decreased by 9.90 per cent to N8.46, and C&I Leasing moderated by 9.80 per cent to N6.90.
On the first trading session of this week, market participants bought and sold 762.8 million shares valued at N18.4 billion in 55,374 deals compared with the 687.4 million shares worth N15.0 billion traded in 41,553 deals last Friday, a spike in the trading volume, value, and number of deals by 10.97 per cent, 22.67 per cent, and 33.26 per cent, respectively.
Tantalizers ended the day as the most active stock with 88.5 million units sold for N329.4 million, Zenith Bank traded 40.2 million units worth N2.9 billion, Veritas Kapital transacted 39.2 million units valued at N92.1 million, Universal Insurance exchanged 29.3 million units for N38.1 million, and First Holdco transacted 27.6 million units worth N1.1 billion.
The sectorial performance yesterday showed that the mood of investors was in the sell region despite the slight growth recorded by Customs Street, as only the energy index closed in green, rising by 2.00 per cent.
The insurance counter was down by 1.99 per cent, the banking industry depleted by 0.64 per cent, the consumer goods shrank by 0.37 per cent, and the industrial goods retreated by 0.08 per cent.
When the first trading day of February 2026 ended on Monday, the All-Share Index (ASI) went up by 14.23 points to 165,384.63 points from 165,370.40 points, while the market capitalization chalked up N9 billion to finish at N106.162 trillion compared with the previous session’s N106.153 trillion.
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