Weekly Economic Index: Naira depreciates further as inflation rate falls

Since the global oil price crash in 2014, Nigeria has been one of the hardest-hit economies due to its overdependence on oil as its main source of revenue. China’s economic slowdown, as well as the United States’ rate hike, also affected its economy adversely. As a result, Nigeria’s economic growth has declined dramatically, with its currency falling to an all-time low. As a result of the new monetary policies, investors are pulling out regularly as most of them are scared to leave their investments in the country. The Central Bank of Nigeria (CBN) put in stringent policies to help save the Naira from falling but all efforts seem to have backfired.

However, it looks like that is all about to change as the CBN, which once showed that its decisions were not independent of the federal government, seem to be taking a different turn. But it is still uncertain if the CBN will be able to sustain some of its recent policies, which are geared towards saving the Naira from falling.

Below is the Ventures Africa Weekly Economic Index, for the week ending 14th of April 2017. This economic index gives you a glimpse into the recent activities in Nigeria’s economy as well as changes that could affect the economy:

How did the Naira fare?

us-dollars-nigerian-naira Weekly Economic Index

During the week under review, the Naira depreciated further against the dollar at the parallel market to 410 Naira/$ on Friday 14th April 2017, from 405 Naira/$ recorded on Friday 7th April March 2017.

The Central Bank of Nigeria (CBN) disclosed that demand for dollars by banks fell by 65 percent during its last foreign exchange auction. The Acting Director, Corporate Communications Department of CBN, Isaac Okoroafor said that the banks were only able to pick $45 million out of the $100 million offered by the CBN on the wholesale spot.

The Central Bank of Nigeria (CBN) also announced that it has increased weekly dollar sale to bureaux de change (BDCs) operators by 100 per cent to $40,000 per week per BDC effective from next week.

The Nigerian Stock Market

Nigeria Floating Naira Weekly Economic Index

According to the recent data released by the Nigerian Stock Exchange, as of 14th April 2017, the market closed trading on a negative note as the all share index decreased 0.92 percent from the previous week ending 7th April 2017. Market capitalization at the close of trading was N8.827 trillion down from N8.91 trillion recorded the previous week. The All Share Index for the week under review closed at N25,510.01.

Top five price Gainers and Decliners in the week under review:

Top five price Gainers

  1. Fidelity Bank Plc
  2. C & I Leasing Plc
  3. Transnational Corporation Of Nigeria
  4. Fidson Healthcare Plc
  5. International Breweries Plc

Top five price Decliners

  1. Dangote Sugar Refinery Plc
  2. FCMB Group Plc
  3. Mobil Oil Nig Plc
  4. Jaiz Bank Plc
  5. Dangote Flour Mills Plc

Did the price of crude oil change?

oil-rig Weekly Economic Index

The OPEC weekly basket price revealed that between 10th and 14th of April 2017, the price of crude oil increased considerably from $53.13 per barrel to $53.67 per barrel. According to report from the Centre for the Study of the Economies of Africa (CSEA), the rise in crude oil prices reflects demand-side expansion, due to a myriad of factors: a slower rise in USA crude reserves, huge supply disruptions in Libya, and the prospective extension of OPEC supply cut deals in member countries. The strengthening of crude oil price amid calm in the Niger Delta oil region presents a positive outlook for the Nigerian economy.

Dividends announced so far in 2017

Weekly Economic Index

Tracking companies that have announced their dividends are very important for the country as it affects the share price of the company. This also enables people to know if they are eligible to collect the dividend, when it will be approved and when it will be paid. So far the companies that have announced the full year reports are Vitafoam Plc, Greif Nigeria Plc, United Capital, Nigerian Breweries, Transcorp Hotels Plc, Africa Prudential, Zenith Bank, Dangote Cement, Nestle Nigeria, Access Bank, Guaranty Trust Bank, Total Nigeria Plc, Lafarge Africa Plc, Custodian and Allied Plc, MRS Oil Nigeria Plc, United Bank for Africa Plc, GlaxoSmithKline Consumer Nig. Plc, Unilever Nigeria Plc, FCMB Group Plc, Dangote Sugar Refinery Plc, Stanbic IBTC Holdings Plc, Pharma-Deko Plc, UACN Plc, AIICO Insurance Plc, Chemical and Allied Products Plc, Trans-Nationwide Express Plc, AXA Mansard Insurance Plc, Mobil Oil Nigeria Plc, Beta Glass Plc, Infinity Trust Mortgage Bank Plc, Okomu Oil Palm Company Plc NASCON Allied Industries Plc, B.O.C. Gases Plc, Learn Africa Plc, NEM Insurance Plc, Nigerian Aviation Handling Company Plc, Med-View Airline and Fidelity Bank.

How low is the external reserve?

Weekly Economic Index

Data from the website of the Central Bank of Nigeria reveals that as of April 12th, 2017, Nigeria’s external reserve increased by $91.05 million to $30.417 billion from $ 30.326 billion recorded on April 5th, 2017.

What happened to Nigeria’s inflation rate?

Weekly Economic Index

The recent data released by the National Bureau of Statistics (NBS) showed that Nigeria’s inflation rate dropped in March. Consumer Price Index (CPI), which is the measure of inflation, dropped 0.52 percentage points from 17.78 percent recorded in February 2017 to 17.26 percent in March 2017.

The Food Index increased by 18.44 percent (year-on-year) in March, slightly down 0.09 percent points from the rate recorded in February (18.53 percent). This rise was driven by an increase in the prices of bread, cereals, meat, fish, potatoes, yam and other tubers and wine. The lowest increase in food prices year-on-year was recorded by Soft Drinks, Fruits, Coffee, Tea and Cocoa.

During the month, the highest year-on-year increases were seen in electricity, liquid and solid fuels, fuels and lubricants for personal transport equipment, clothing materials and other articles of clothing. While the continued decreases in the inflation rate may be a good sign for the economy, it is worthy to know that the month on month inflation rates are not as good as the headline inflation.

According to Nairametrics, from available data, the month on month rise in inflation has been above 1 percent since January 2017. It is currently at 1.7 percent, which it last touched in June 2016. The Average 12-monthwere inflation rate is also 17.3 percent and has been rising for quite some time. While the year on year inflation rate is dropping, the average yearly inflation rate is still rising.

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