• Wednesday, April 24, 2024
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BusinessDay

Nigeria, South Africa rate decisions in focus

Naira rebound: Under-pressure Cardoso has a burden of sustaining the feat

The central banks of Nigeria and South Africa have pivotal rate decisions coming up this week while the United States will auction three and six month treasury bills.

March 25
Possible rate hike as Nigeria MPC meets on Monday

The Central Bank of Nigeria will be holding the 294th meeting of the Monetary Policy Committee on Monday & Tuesday with a possible rate hike in view.

Market analysts anticipate a cautious approach from the MPC, balancing economic growth with price stability. At the last meeting the benchmark interest rate was increased by 400 basis points to 22.75 percent from 18.75 percent.

Read also: South Africa and a looming election imbroglio

Since the MPC last met in February, inflation has surged to 31.7 per cent, up from 29 per cent in January.

US Treasury bill auction

The United States will begin a three-month and six-month treasury bill auction on Monday.

During the last three-Month Bill Auction, the yield in the United States was 5.245 percent, slightly lower than the previous auction’s rate of 5.25 percent.

While the six-month bill rate came in at 5.105 percent.

Governments issue treasuries to borrow money to cover the gap between the amount they receive in taxes and the amount they spend to refinance existing debt and/or to raise capital.

Despite the slight dip in yield, the auction continues to demonstrate investor confidence in the U.S. Treasury bills, which are considered a safe haven asset for many investors. The consistent demand for these bills indicates ongoing stability in the U.S. financial markets.

The rate on a Treasury Bill represents the return an investor will receive by holding the bill for its entire duration. All bidders receive the same rate at the highest accepted bid.

U.S. Treasury Bills have maturities of a few days to one year. Governments issue treasuries to borrow money to cover the gap between the amount they receive in taxes and the amount they spend to refinance existing debt and/or to raise capital.

March 26

Federation Account Allocation Committee (FAAC) February 2024 Disbursement

The National Bureau of Statistics (NBS) will release the report on Federal Account Allocation Committee disbursements for the month of February 2024.

According to the NBS, the Federal Account Allocation Committee (FAAC) distributed N2.07 trillion in February 2024 from the total revenue collected in January 2024 among the Federal Government, States, and Local Government Councils.

However, all other revenue segments decreased month-on-month.

Read also: Meet CBN’s new Monetary Policy Committee members

March 27

South Africa interest rate decision

The South African Reserve Bank will decide on where to set the benchmark interest rate on Tuesday, March 27.

All 23 economists surveyed in a Reuters poll unanimously forecast that the bank will keep its repo rate steady at 8.25 percent. They forecast that the bank will wait until the third quarter to start cutting.

In January the South African Reserve Bank (SARB) held interest rates at its first monetary policy meeting of the year.

As short term interest rates are an important determinant of currency valuation, traders watch interest rate changes closely.

A reading that is stronger than forecast is generally supportive (bullish) for the ZAR, while a weaker than forecast reading is generally negative (bearish) for the ZAR.

March 29

Nigeria Domestic and Foreign Debt (Q4, 2023)

The National Bureau of Statistics will release a report on Nigeria Domestic and Foreign Debt for the fourth quarter of 2023.

In the third quarter, public debt stock which includes external and domestic debt stood at N87.91 trillion (US$114.35 billion) in Q3 2023 from N87.38 trillion (US$ 113.42 billion) in Q2 2023, indicating a growth rate of 0.61%on a quarter-on-quarter basis.

Total external debt stood at N31.98 trillion (US$41.59 billion) in Q3 2023, while total domestic debt was N55.93 trillion (US$72.76 billion).

Lagos state recorded the highest domestic debt in Q3 2023 with N960.50 billion, followed by Delta with N371.49 billion.

Jigawa state recorded the lowest domestic debt with N42.89 billion, followed by Kebbi with N60.88 billion.

Read also: Monetary and fiscal policy coordination: Stabilizing prices and output growth

Nigeria Labour Force Survey Report

The NBS will release the report on the Labour force on March 29.

The latest Nigeria Labour Force Survey showed that the unemployment rate rose to 5.0 percent from 4.2 percent in Q2. It stood at 4.1 percent in Q1, down from 5.3 percent in Q4 of 2022.

The labour force participation rate measures the share of a country’s working-age population that is in the labour force.