As we often write, Nigeria’s public finances – all the way from trade balances through to the Federal Government’s budget – work well when oil trades over US$50.00/bbl. We have seen some forecasts predict oil prices above US$50.00/bbl as early as Q4 this year, and indeed oil (in this case Brent) traded at around US$47.00/bbl …

The past three weeks have seen an unusual number of macroeconomic changes. The Central Bank of Nigeria (CBN) announced plans to clear the backlog of foreign currency demands and began supplying US dollars to the Bureaux de Change (BDC). Nigeria won an important High Court case in London. And oil prices fell. However, we don’t …

It is easy to forget – because the case rumbles on in foreign courtrooms – the danger posed to the Federal Government of Nigeria (FGN) by the award against it of US$6.6bn in favour of the engineering firm Process & Industrial Developments (P&ID). With accrued interest the award has ballooned to some US$10.0bn and, if …

Nigeria’s public finances work well when oil prices are above US$50.00/bbl (better still, above US$60.00/bbl). Though prices are trending in that direction the prospect the Democratic Party winning November’s presidential election puts a question mark over the trend next year.  And the Organization of the Petroleum Exporting Countries (OPEC) insists on Nigeria cutting its production …

Nigeria’s Q2 GDP performance was released this morning, with GDP down 6.10% year-on-year and non-oil GDP down 6.05% y/y. This was not a surprise (although one forecast poll predicted a 4.05% decline), given that in June the World Bank forecast a 3.2% contraction and the IMF forecast a 5.4% contraction for full-year 2020, suggesting that …

From mid-March through to the beginning of this month, the Federal Government of Nigeria (FGN) bond market was a one-way bet, with yields tightening and prices moving up steadily. Two weeks ago the market cracked, with a brief sell-off, which was a reminder that prices can go down. However, it seems that institutional liquidity is …

Last week we received a lot of questions about the foreign exchange markets. Was the World Bank forcing the Nigeria’s hand in demanding unification of all exchange rates? Why was the parallel market rate not weaker? We do not know the inner workings of the World Bank, nor about its dialogue with Nigeria’s monetary authorities. …

Talking with clients about our report ‘Navigating the Capital Market; the Investors’ Dilemma’, 14 July 2020 we sometimes hear back that Federal Government of Nigeria bonds are safe while equities are risky. Is this entirely true? Buying long-dated FGN bonds have been profitable this year, but what if interest rates were to rise? Bondholders might …

Global equity markets have been trending up this month. Markets are showing confidence in a global economic rebound, despite significant setbacks from the rising number of recorded Covid-19 cases in the US, the European Union, India and Brazil. Commodity prices have also been rising, but the behaviour of oil prices and copper prices have been …

Until recently, the behaviour of the parallel exchange rate this year has been a mystery. Why did it not respond to pent-up demand for US dollars by adjusting rapidly? The answer is a very weak economy. Learn more below… FX As we wrote last week, there is downward pressure on the Naira in the parallel …