The exchange rate at the official market recorded a marginal depreciation during the week, with N605 going for a Dollar. Also Nigeria’s crude oil production and its external reserve saw a downward trend.
Nigeria’s inflation equally rose to 16.82% in April 2022 as a result of the increase in energy and food prices, even as Eurobond Yield rose to 10.6%, driven by the increase in US Interest rates by the US Federal Reserves.
These and many more happened during the week.
Here is a compilation of notable happenings in the Nigeria macro-economic space, markets, regulators as well as other world economies.
MACROECONOMY
Exchange rate: Naira closes week at N605/$1 at the black market
- The exchange rate at the official market recorded a marginal depreciation during the week, falling by 0.005% to close at N419.02/$1 on Friday from N419/$1 recorded on the corresponding day of the previous week.
- Similarly, at the black market, naira closed at N605/$1 on Friday, 20th May 2022 compared to N591/$1 recorded in the previous week. This is the lowest level on record that the naira has hit against the US dollar.
- Also, the exchange rate at the peer-to-peer market closed at N604/$1, representing a fall compared to N598.5/$1 recorded as of the previous week. Meanwhile, it is worth noting that the exchange rate had traded as high as N607.32/$1 in the previous week.
Nigeria’s inflation rate jumps to its highest level in 8 months
- Nigeria’s inflation rose to 16.82% in April 2022, following a similar uptick recorded in the previous month as a result of the increase in energy and food prices.
- Food inflation rose to 18.37% in the review month, an increase compared to the 17.2% recorded in the preceding month. This rise in the food index was caused by increases in the prices of Bread and cereals, Food products, Potatoes, yam, and other tubers, Wine, Fish, Meat, and Oils.
- The core inflation rate rose to 14.18% in April 2022 from 13.91% recorded in the previous month. The rise in the core index was attributed to the increase in the prices of Gas, liquid fuel, Cleaning, repair and hire of clothing, Clothing materials, other articles of clothing, and clothing accessories.
Energy crisis pushes Nigeria’s core inflation rate to a 5-year high
- Nigeria’s core inflation rate soared to a 5-year record high in April 2022 as the index rose by 14.18% year-on-year in the review month from 13.91% recorded in the previous month.
- According to the NBS, Nigeria’s “all items less farm produce”, otherwise known as Core inflation quickened by 0.26% points month-on-month in April 2022, largely due to significant increases in the prices of gas, liquid fuel, clothing materials, repair and hire of clothing amongst other clothing accessories.
- Incessant hikes in the price of goods and services have been a recurrent issue in Nigeria, since 2019 when the federal government ordered the closure of land borders, which caused a spiral effect in food prices. This was also exacerbated by the covid-19 pandemic as the cost of most services soared across the world.
Nigeria’s oil production falls to 1.2mbpd in April 2022
- Nigeria’s crude oil production fell to an average of 1.219 million barrels per day (mbpd) in April 2022, representing a 1.53% decline compared to 1.238mbpd recorded in the previous month.
- Recall that the Organization of the Petroleum Exporting Countries (OPEC) increased Nigeria’s oil production quota earlier in the month from the 1.735mbpd target approved in May 2022 to a new target of 1.772mbpd for June 2022.
- This is significantly higher than the current levels at which Nigeria is producing. Meanwhile, the continuous decline in recent times has been attributed to oil theft, pipeline vandalism, and oil bunkering.
External reserve
- Nigeria’s external reserve continues in its downtrend as it lost $246.25 million during the week, representing a 0.63% decline from $39.04 billion to stand at $38.79 billion as of Thursday, 19th May 2022.
- The Nigerian reserve level continues to plunge considering the apex bank’s continual intervention in the official I&E window. The levels have remained low despite rising crude oil prices as Nigeria’s production capacity is below the OPEC quota.
Nigerian mega-companies earn higher revenues despite inflation
- Nigeria’s largest companies operating in the manufacturing, telecommunication, oil and gas, and agricultural sectors earned a whopping sum of N2.33 trillion as revenue in the first quarter of 2022, outpacing their earnings in the corresponding period of 2021 by 33.2%.
- Most interestingly is the stellar 38.1% growth recorded in their operating profit at N614.25 billion compared to N444.89 billion recorded in the corresponding period of 2021. This shows how the companies have been able to manage their operating expenses despite inflationary headwinds in the Nigerian economy
- According to the analysis. telco giant, MTN Nigeria recorded the highest revenue of N470.98 billion, largely driven by its voice call revenue, while leading cement manufacturer, Dangote Cement followed with a N413.18 billion top-line revenue.
MARKETS
Equities market
- The All-Share Index of the Nigerian stock market moderated during the week, declining by 0.22% to stand at 52,979.96 index points. This is the first decline after five consecutive weekly gain recorded by the local bourse.
- A total turnover of 3.02 billion shares worth N31.78 billion in 29,153 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 1.82 billion shares valued at N27.19 billion that exchanged hands last week in 36,286 deals.
- The Financial Services Industry led the activity chart in terms of traded volume with 2.24 billion shares valued at N12.39 billion traded in 10,877 deals; thus contributing 74.3% and 39.01% to the total equity turnover volume and value respectively.
Nigeria’s Eurobond Yield rose to 10.6%
- Nigeria’s Eurobond Yield with a maturity of 2022 closed trading on Friday at a yield of 10.6% up from 8.9% at the end of April 2022. The bond is expected to mature in 5 years.
- Bond yields have risen in the last few weeks driven by the increase in US Interest rates by the US Federal Reserves. The US Fed commenced rate hikes in response to the record-high inflation rate experienced in the world’s largest economy. The US Inflation rate stood at 8.3% in April.
- A hike in US interest rates is targeted at curbing inflation in the world’s largest economy which is achieved when the rate hikes lead to a rise in borrowing costs.
- The rise in borrowing costs means people borrow less thus reducing the amount of cash in circulation in the US Economy.
Source: Nairametrics.
