From time to time we notice equity markets taking a pause, trading sideways for a month, before launching again upwards or downwards. One of the ways to measure the health of an equity market is its turnover. The Nigerian equity market’s turnover has been trending downwards recently, prompting the question: “Where is the institutional investor?” …

The International Monetary Fund (IMF) recently revised downwards its estimates of global economic activity. The global economy is now forecast to contract by 4.9% this year, with Nigeria due to shrink by 5.4%. Global equity markets were already nervous in June, giving up some recent gains. Yet key commodity markets (e.g. oil and copper) continue …

The fiscal position of the Federal Government of Nigeria (FGN) is, not surprisingly, tight, as oil prices have crashed and economic growth has slowed down. As we describe below, being able to re-finance debt cheaply is critical to the FGN. So, the fact that Naira interest rates are so low (no government T-bill or bond …

When a currency is under pressure you expect interest rates to go up, and the long-term (we mean 10-year) lesson is that this generally happens in Nigeria. But is it not happening now. A huge amount of liquidity held by investing institutions (such as pension funds and mutual funds) is seeking a home. The result …

The confusing thing about oil prices is that, after the Organization of the Petroleum Exporting Countries (OPEC) and Russia agreed to production cuts in mid-April, prices continued to fall for a further two weeks. Since late April the price of Brent crude has more than doubled. The reason for the continued fall during April was …

Last week the Central Bank of Nigeria (CBN) surprised the market by cutting its policy rate from 13.50% to 12.50%, a clear signal that it approves of market interest rates (see sidebar) that are all below inflation. The CBN’s idea is to avert a recession with a monetary stimulus after a weak GDP print (growth …

The Monetary Policy Council (MPC) of the Central Bank of Nigeria (CBN) meets this week to consider its policy rate and the overall direction of interest rates. As we pointed out last week, the upward movement in the CBN’s foreign exchange reserves, combined with the positive direction in oil prices and the stock market, gives …

The foreign exchange reserves of the Central Bank of Nigeria (CBN) are going up again. This is largely thanks to public-sector loans (such as the US$3.4bn facility granted recently by the IMF) to the government. It is tempting to see such loans as the building blocks of a bridge; this bridge takes the CBN’s FX …