MARKET NEWS

The Nigerian naira snapped from its losing week-long streak and is poised to continue its rally on the back of the recent 0.5 percent rate hike.

Meanwhile, the US Bureau of Labour Statistics will release data showing trends in the jobless rate for September after unexpectedly slowing in August.

“The naira is expected to further moderate against the dollar, following the MPC’s rate hike last week.”

Monday, September 30, 2024

NBS to release FAAC report

The National Bureau of Statistics will release the Federation Account Allocation Committee report for August on Monday (today).

The FAAC disbursed the sum of N2.68 trillion to the three tiers of government in July 2024 from the total revenue generated in June 2024.

The Federal Government received a total of N459.78 billion; states and local governments received a total of N461.98 billion and N337.02 billion, respectively, while the sum of N95.60 billion was shared among the oil-producing states.

A further breakdown of revenue allocation distribution to the Federal Government of Nigeria (FGN) revealed that a total net amount of N319.49 billion was disbursed to the FGN consolidated revenue account, while N7.19 billion was received as a share of derivation and ecology, N3.60 billion as a stabilisation fund, N12.08 billion for the development of natural resources, and N12.34 billion to the Federal Capital Territory (FCT) Abuja.

The Federation Account Allocation Committee disburses allocations from the revenues generated into the Federation’s accounts into different sectors.

Tuesday, 1st October, 2024

Stanbic IBTC to publish Nigeria’s PMI

Stanbic IBTC is expected to release Nigeria’s purchasing managers’ index for August on Tuesday.

Business activity in Nigeria fell to an eight-month low in July as steep price pressures hit demand and resulted in renewed reductions in both business activity and new orders, a new Purchasing Managers’ Index (PMI) has shown.

Business activities declined to 49.2 in July, down from 50.1 in June and below the 50.0 no-change mark for the first time in eight months.

According to the report, input costs and selling prices continued to rise rapidly, although there were some signs that efforts to secure sales resulted in a softer pace of output price inflation. Meanwhile, confidence hit a new record low.

It said this was despite the rate of inflation easing to the slowest since May 2023 amid reports from some panellists that they had lowered charges as part of efforts to secure.

The report stated that further increases in purchase prices and staff costs were registered in July. “Purchase price inflation quickened to a four-month high, often due to currency weakness but also higher raw material costs.”

Analysts are expecting the report to show a mild increase in August due to the recent deceleration of inflation for two consecutive months but to decline again in September and October due to the ongoing rise in petrol prices.

Friday, 4th October, 2024

US expects unemployment rate

The US Bureau of Labour Statistics will be releasing its unemployment data for September 2024 on Friday.

The unemployment rate slowed to 4.2 percent in August, compared to 4.3 percent in the previous month. This is however lower than the long-term average of 5.69 percent. The forecast had been for the jobless rate to hold steady at 4 percent.

The report led to a chorus of Fed officials declaring that the U.S. central bank was ready to start cutting rates at its policy meeting in about two weeks. Higher borrowing costs are curbing overall demand in the economy.

The Fed chair, Jerome Powell, recently signalled plans to further reduce interest rates even after it cuts by a half point, the first time since 2019.

The Fed’s decision lowers its benchmark short-term rate to a range of 4.75 percent to 5 percent from a 23-year high of 5.25 percent to 5.5 percent.

The move is expected to ripple through the economy, providing the first dose of relief in years to Americans who have struggled with high borrowing costs for mortgages, credit cards, and auto and other loans.

The unemployment rate measures the percentage of the total workforce that is not working yet actively seeking employment.

A reading that is higher than forecast is generally negative for the USD, while a lower than forecast reading is generally supportive for the USD.

Read also: South Africa’s Rand strengthens to 20-month high as Naira struggles to recover

Naira to extend its winning streak on rate hike

The naira is expected to further moderate against the dollar, following the MPC’s rate hike last week.

The local unit snapped a three-day losing streak on Thursday as it appreciated across foreign exchange (FX) markets following increased dollar liquidity.

Compared to N1,667.42 quoted on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira gained to N1576.10 from N1,667.42 on Wednesday.

Dollar liquidity also surged as supply by willing buyers and willing sellers increased by 232.49 percent to $334.05 million on Thursday from $100.47 million recorded on Wednesday at NAFEM.

The CBN also sold dollars to Bureau De Change (BDC) operators at a rate of N1,590 per dollar in a move aimed at boosting liquidity in the foreign exchange market.

The local currency also gained N5 on the parallel market, commonly referred to as the black market. It closed at N1,695 as against N1,700 traded on Wednesday.

Analysts are expecting the naira to rebound to 1,450 to 1,500/US dollar by the end of 2024 on continued consolidation from the apex bank.