Naira’s outlook positive as US releases inflation data

The Nigerian naira’s volatility is expected to weather as the central bank continues to intervene to ensure stability in the FX market that’s endured great decline in recent times. Meanwhile, the United States Bureau of Labour Statistics will publish the country’s consumer price index for September.

 “The CBN plans to issue N2.20 trillion in Treasury bills during the fourth quarter of 2024, matching the amount set to mature from September to November this year.”

Monday, October 7, 2024

NBS to release air transportation report for H1

The National Bureau of Statistics (NBS) will be releasing its air transportation data for the first six months (H1) of 2024 on Monday.

The average fare paid by air passengers for specified routes on a single journey rose by 56.56 percent from N79,011.38 in August 2023 to N123,700.14 in the same period this year.

On a month-on-month basis, the fare jumped by 25.51 percent from N98,560.28 in July 2024, making air travel more expensive for commuters.

The report will detail how fares had either slowed or risen in the first half of the year.

Wednesday, October 9

CBN to auction N81.90 Treasury Bills

The Central Bank of Nigeria will be auctioning Treasury bills worth N81.90 billion on Wednesday.

It will be auctioning N28.15 billion for the 91-day tenor, N22.67 billion for the 182-day tenor, and for the 364-day N30.77 billion.

At the last auction, CBN rolled over a total of N227.54 billion across the 91-182- and 364-day tenors and sold only N227.45 billion.

This was after the CBN signalled that market rates were going to rise in tandem with the Monetary Policy Rate, which was increased by 50 basis points to 27.25 percent.

The stop rate on the one-year Treasury bill was 20 percent, up by over 1 percent from 18.5 percent at the last auction, while the rates on the 91-day and 182-day Treasury bills rose by 0.3 percent and 0.5 percent, respectively.

Only N177.1 billion worth of one-year Treasury bills was sold despite being oversubscribed to the tune of N250.42 billion. The auction saw an upward move in stop rate to 20.0 percent from 18.59 percent in the previous auction for the one-year bill.

The CBN plans to issue N2.20 trillion in Treasury bills during the fourth quarter of 2024, matching the amount set to mature from September to November this year.

The amount to be offered in Q4 is 41.03 percent higher than N1.56 trillion issued in the preceding (third) quarter of 2024.

Read also: Naira loses N90.43 at official market in one week

Thursday, October 10, 2024

US to release inflation rate

The United States Bureau of Labour Statistics will release the country’s inflation report for September on Thursday.

The US Consumer Price Index rose 2.5 percent in August, down from 2.9 percent in July, and is the lowest reading since February 2021.

The personal consumption expenditures price index rose 0.1 percent for the month and at an annual rate of 2.2 percent, down from July’s 2.5 percent rate.

The core index, excluding energy and food costs, also rose 0.1 percent for the month, although the annual rate edged up slightly to 2.7 percent from 2.6 percent a month ago.

Much of the improvement in August came as energy costs declined by 0.8 percent. Food prices continued to moderate, rising by a modest 0.1 percent.

Prices for staples such as groceries and gasoline have normalised, and the inflationary trend appears firmly to the downside.

The much-expected rate cut took place in September, but not without a surprise with a half-point rate (50 basis points) cut on Wednesday, bringing its target range to 4.75 percent to 5.00 percent.

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

Economists see US inflation reaching the Federal Reserve’s target of 2 percent early next year.

Read also: Naira gains as dollar supply reaches four-month high of $450.39m

Naira’s volatility to reduce in near term on CBN’s interventions

Nigeria’s naira volatility is expected to slow in the near term as the Central Bank of Nigeria (CBN) continues to intervene in the foreign exchange market.

The CBN has been intervening in the foreign exchange markets as it recently sold about USD20,000 to BDCs at a rate of NGN1,590/USD, allowing for a profit margin of 1 percent.

This intervention led to an increase in trade volume on September 26, with daily forex turnover reaching USD 575.7 million, one of the highest figures since May 24, 2024, when daily turnover was USD 610.7 million.

According to data from the FMDQ, the naira’s performance in September was the strongest since June 2024, when it closed at NGN1,505/USD on the official window.

The naira, which has suffered a recent loss, saw a 0.6 percent increase, or N9.89, with the dollar being quoted at N1,659.26 on Thursday. This marked an improvement from Wednesday’s closing of N1,669.15 at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data from FMDQ Securities.

The naira also strengthened in the parallel market, where it gained 0.90 percent, or N15, to close at N1,665 per dollar, compared to the previous day’s close of N1,680.

In its recent note, analysts at FBNQuest Capital said that “given the country’s increased oil production, the recently enacted tax relief measures, and OPEC’s stance on declining crude oil prices, we anticipate reduced naira volatility in the near term.”.