Weekly outlook: how currencies, the stock market and foreign exchange reserves fared over the week

The National Bureau of Statistics (NBS) released the CPI (Consumer Price Index) report for the month of March 2022, which showed that Nigeria’s inflation rate had accelerated to a peak five months, standing at 15.92%, an increase of 0.21% compared to the rate of 15.7% recorded the previous month.

The rise in the rate was attributed to the 17.2% rise in the food index, while core inflation stood at 13.91% for March 2022. The rise in the inflation rate food was attributed to rising prices of bread and cereals, foodstuffs, potatoes, yams and other tubers, fish, meats, oils and fats.

The Nigerian economy continues to suffer from heightened inflationary pressure following the energy crisis seen in the third month, with the cost of electricity reaching unprecedented levels due to multiple disruptions to the national grid and a increased fuel cost.

The national grid also collapsed last week, with power generation dropping to 37,964.93 MWh on Saturday, April 9, 2022, when the country needs at least a steady supply of 105,000 MWh in order to have a relatively stable supply of electricity. In the meantime, the network has been restored by the TCN, recording peak production of 4,142.1 MW on Friday April 15, 2022.

Stock market

The All-Share Index of the Nigerian Stock Market closed higher the previous week, up 1.99% to stand at 47,558.45 index points as of April 14, 2022, from 46,631.46 points recorded the previous week.

Notably, all indexes tracked by the exchange saw positive moves during the week in review, with the NGX Banking Index climbing 5.59% to close at 438.78.

A total turnover of 1.247 billion shares worth N22.372 billion in 23,406 transactions was traded during the review week by investors on the Stock Exchange floor, in contrast to a total of 1.137 billion shares worth N10.812 billion which traded hands out of 23,471 bids in the previous week.

Change market

The Foreign Exchange Rate at the Official Counter for Investors and Exporters depreciated by 0.2% in the Review Market to close at N417.5/$1 on Thursday, April 14, 2022, from N416.67/$1 recorded at the end of the previous week.

The market traded for four days during the week, due to the Good Friday holiday, with $581.41 million worth of currency traded in the market, which is higher than the $524.36 million dollars traded the previous week, despite fewer trading days. .

According to data tracked by Nairalytics, the research arm of Nairametrics, the exchange rate in the parallel market depreciated by 0.17% over the week to close at N588/$1 from N587/$1. recorded the previous week.

In the same vein, the exchange rate in the P2P market fell sharply by 2.3% to trade at a low of N589/$1 as of Friday, April 15, 2022, from the recorded N576/$1. Friday, April 8, 2022.

Foreign reserve

Nigeria’s foreign exchange reserves continue to appreciate on the back of the sustained rise in the crude oil market, with Brent Crude trading at $111 a barrel, West Texas Intermediate ($106.95), Bonny Light ($107. $08), Brass River and Qua Iboe both trading at $113.44 a barrel.

The external reserve extended its rise, standing at $39.73 billion as of April 13, 2022, according to data from the Central Bank of Nigeria (CBN).

Outlook

  • Nigeria’s external reserve is expected to continue its upward movement in the new week, albeit marginal moves.
  • As the CBN continues to intervene in the official forex market, we see the exchange rate at the I&E window hovering around N416 – N417 per dollar.
  • The National Bureau of Statistics is expected to release the Gross Domestic Product report for the first quarter of 2022 later this week, and Nairametrics expects an expansion in economic value, following rising inflationary figures in February and March of the year. Also, considering that the economy only grew by 0.51% in the corresponding period of 2021.

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