WEEKLY ECONOMIC INDEX: NAIRA REMAINS STABLE AS FOREIGN RESERVE INCREASES FURTHER - VENTURES AFRICA
When the global oil price crashed in 2014, Nigeria was one of the hardest-hit economies due to its over-dependence on oil as a revenue source. Nigeria’s economy was also affected by China’s economic slowdown, as well as the United States’ rate hike. In order to save the economy from a total collapse, the Central Bank of Nigeria (CBN) put stringent monetary policies in place, which saw investors pulling out of the country.
However, from all indications, the country’s economic situation is changing, as the CBN, which once showed that its decisions were not independent of the federal government, seems to have taken a new turn. The country is no longer in recession and it seems investor confidence in the country has improved.
Below is the Ventures Africa Weekly Economic Index, for the week ending 1st of December 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:
Did the price of crude oil change?
According to the OPEC weekly basket price, the price of crude oil decreased from $61.51 per barrel to $61.06 per barrel between 27th and 30th November 2017.
On the 30th of November 2017, the Organization of Petroleum Exporting Countries (OPEC) held a meeting with its members and they agreed to remove 1.2m barrels a day (b/d) from global oil production. However, OPEC is waiting for non-OPEC countries such as Russia to reduce their production by a further 600,000 b/d. If this happens it would bring oil production cut to 1.8 million barrels per day and the size of this proposed cut will be the first since 2008. OPEC pegged Nigeria’s oil output at 1.8 million barrels per day.
How low is the external reserve?
Data from the website of the Central Bank of Nigeria reveals that as of 29th of November 2017, Nigeria’s external reserve increased by $ 324824414 to $34,816,024,450 from $ 34,491,200,036 recorded on 23rd of November 2017.
According to the Central Bank of Nigeria’s governor, Godwin Emefiele, Nigeria’s external reserve rose as a result of development finance effort and the dogged implementation of the CBN’s FX policies.
How did the Naira fare?
This picture taken on January 28, 2016 in Lagos shows Naira banknotes, Nigeria’s currency.
Nigeria’s central bank governor, Godwin Emefiele, on January 26 dismissed calls to devalue the Naira in his monetary policy committee statement. Instead he chose to continue propping up the currency at 197-199 Naira to the dollar and maintain foreign-exchange restrictions. As a result, the Naira on the black market is hovering around a record low of 305, fuelling complaints from domestic and foreign businesses who can’t access dollars required for imports. / AFP / PIUS UTOMI EKPEI (Photo credit should read PIUS UTOMI EKPEI/AFP/Getty Images)
During the week under review, the Naira remained unchanged against the dollar at the parallel market as it still sold at 364 Naira/$ on Friday 1st of December 2017.
The relative stability of the Naira against the Dollar has impacted positively on price stability of most goods in the market.
According to reports, the Naira has appreciated by 30.3 percent since February when the CBN began its aggressive interventions at the foreign exchange market.
The Nigerian Stock Market
According to the recent data released by the Nigerian Stock Exchange (NSE), as of 30th of November 2017, the market closed trading on a positive note as the all share index increased by 1.55 percent from the previous week ending 24th of November 2017. Market capitalization at the close of trading was N13.215 trillion, which is a 1.58 percent increase from N13.009 trillion recorded the previous week. The All Share Index for the week under review closed at 37,944.60.
Top five price Gainers and Decliners in the week under review:
Top five price Gainers
- Fidelity Bank Plc.
- Forte Oil Plc.
- Law Union And Rock Ins. Plc.
- Caverton Offshore Support Grp Plc
- Dangote Flour Mills Plc
Top five price Decliners
- 11 Plc.
- University Press Plc.
- Neimeth International Pharmaceuticals Plc
- Livestock Feeds Plc.
- Guinness Nig Plc.