WEEK AHEAD: Oil prices rebound, dollar supply seen rising
OIL PRICE BOUNCES BACK
Crude oil prices are beginning to record tepid growth demands are expected to increase in the coming week due to revived optimism in the market as the United Kingdom has given the first vaccine to about half of its population, while the US has vaccinated about 30% of its population.
Crude oil prices have recorded a marginal increase during the week despite the resolve of the OPEC+ to reduce production cuts in the coming months. However, US Shale Giant have commended the OPEC+ group in bringing supply and demand back to balance (Brent Crude closed at $63.2 (+0.06%), WTI Crude closed at $59.75 indicating 0.25% gain).
Brent crude oil price recorded a marginal increase on Thursday as it closed at $63.2 per barrel, indicating a 0.06% gain compared to $63.16 recorded at the close of trade on Wednesday.
DOLLAR SUPPLY SPIKES BY 690%
Naira appreciated against the US Dollar at the Investors and Exporters window on Thursday to close at N409.65 to a dollar. This represents a N1.35k gain when compared to N411/$1 recorded on Wednesday, 7th April 2021.
The opening indicative rate closed at N410.5 to a dollar on Thursday. This represents a N0.76 depreciation when compared to N409.74/$1 recorded on Wednesday. Also, an exchange rate of N419 to a dollar was the highest rate recorded during intra-day trading before it closed at N409.65/$1. It also sold for as low as N394/$1 during intra-day trading. Forex turnover at the Investor and Exporters (I&E) window increased by 690.6% on Thursday, 8th April 2021.
Businessday analysts anticipate further increase in dollar supply with a maintained threshold of N406/$1 and N413/$1 in the week ahead.
“OWAMBE” ERA GRADUALLY RESURFACES AS LAGOS EASES RESTRICTIONS ON SOCIAL EVENT CENTRES
The coming week comes with exciting news for die-hard ‘OWAMBE’ fans as well as social event planners. It can be recalled that in July 2020, the Lagos State Government had issued fresh guidelines on the reopening of event and social centres following their shutdown as part of measures to contain the spread of the coronavirus pandemic. The state government insisted that the owners of such facilities must register with the government pending further directives.
The Lagos state government has further eased restrictions on social and event centres in the state. This follows due consultations and deliberations between the Lagos State Governor, Babajide Sanow-Olu, and relevant stakeholders and MDAs.
The state government has pegged the occupancy limit for event centres in Lagos to 500 people while social events can now have 200 people at a time. This disclosure was contained in a statement by the Lagos State Commissioner for Tourism, Arts and Culture, Uzamat Yusuff, and the Director-General of the Lagos State Safety Commission, Mr Lanre Mojola, on Friday, April 9, 2021.
The statement noted that safety marshals will be deployed to any social event with over 200 people and event centre exceeding the 500 limits.
The statement partly read, “All event centres must hold a valid license of The Lagos State Ministry of Tourism, Arts and Culture prior to operating as an event centre in the State.
“All event centres must be duly registered and verified on The Lagos State Safety Commission website www.lasgsafetyreg.com prior to holding any event.
An Event Safety Clearance must be obtained from the Lagos State Safety Commission through the website www.lasgsafetyreg.com for any proposed event or exhibition.
Safety Marshals shall be deployed by an accredited event safety consultant from Lagos State Safety Commission for every social event with attendance exceeding over 200 people.
SUSPENSION OF PAYSTACK AND OTHER NON-BANK FINANCIAL INSTITUTIONS FROM OFFERING BVN VALIDATION SERVICES
Non-banks may have to look for alternative ways to carry out identity verification for their users in the coming week following the new CBN regulation. The Central Bank of Nigeria has reportedly suspended finTechs and other third-party partners from offering BVN validation service.
This was made known in an email from Paystack to customers which stated, “We’ve recently been made aware of a regulatory directive from the primary custodian of Nigeria’s BVN service to all their partners to suspend the provision of the BVN validation service to their third-party partners. This directive affects every non-bank in Nigeria that offers BVN Validation services. In light of this news, we’re hereby informing you that the BVN Resolve service will be temporarily unavailable starting at midnight, April 8, 2021.”
This suspension thus means that with the commencement of the new week, non-banks will have to look for alternative ways to carry out identity verification (KYC) for their users through NIN, Voters ID, Driver’s license etc.
FREE-FLOW OF TRAFFIC ON THE LAGOS-BADAGRY EXPRESSWAY
The Commissioner of Police in Lagos State, CP Hakeem Odumosu, has ordered the immediate dismantling of all illegal roadblocks by police teams from the command on the Lagos-Badagry expressway.
The directive is to checkmate the illegal activities of the police on that route which have been condemned by the government, some stakeholders and international bodies and also bring sanity and decency to their operations along that axis. That disclosure was contained in a statement signed by the Police Public Relations Officer of the Lagos State Police Command, CSP Olumuyiwa Adejobi, on Saturday, April 10, 2021.
Adejobi in the statement said that CP Odumosu gave the order on Friday while addressing Area Commanders and Divisional Police Officers in the command on the general security situation in the state and reviewing the anti-crime strategies of the command in order to sustain its feats on crime control.
The Commissioner, however, noted that other police operatives from other police formations, outside the supervision of the Lagos State Police Command who operate along the route, would be contacted to adjust and do the needful to restore sanity to their operations. The CP Odumosu then warned the concerned Area Commanders to desist and take necessary action on full compliance with his order as any defaulter will be sanctioned accordingly.
With the implementation of this directive, the Lagos-Badagry expressway axis is bound to experience free-flow of traffic and reduction of ‘illegal taxation’ nuisance in the coming week.
EXTERNAL RESERVE CONTINUES ITS TRAJECTORY TOWARDS RECOVERY
Nigeria’s external reserve gained $1.79 million on Thursday, 8th April 2021 to close at $34.977 billion, being the highest external reserve position recorded in over a month. This indicates a 0.01% increase when compared to $34.975 billion recorded on Thursday 1st April 2021. This also represents an increase in the country’s external reserve position for the 12th consecutive day, having endured a significant downturn in the early parts of the year. Nigeria’s reserve has added a total of $560.5 million in 12 days.
This recent increase in Nigeria’s external reserve could however be attributed to the increase in crude oil prices recorded earlier in March before the recent bearish trade in the crude market. It could be attributed to the possible increase in diaspora remittance as the CBN offers incentives for every unit of dollar received in Nigeria from diaspora remittance.
With the positive resultant effects of some CBN policy initiatives and the trajectory of oil prices, the external reserves are anticipated to maintain this trajectory in the week ahead.