Financial News Highlights May 13, 2024 – Nigeria, US, UK Inflation/Unemployment Reports etc

 

Nigeria, US expect an inflation report for April as the UK releases unemployment data

 

Nigeria’s consumer price skyrocketed to a 28-year high in March at 33.2 percent, which has stiffened spending power and resulted in a cost of living crisis.

 

The central bank chief said the country’s headline inflation is expected to decrease later in the year.

 

Meanwhile, the US consumer price index has equally seen an uptick, increasing from 3.2 percent in February to 3.5 percent in March. Analysts expect the figure to rise marginally as the world’s largest economy battles with the scourge of inflation.

UK Employment Rates

The United Kingdom unemployment rate rose to 4.2 percent in February from 3.9 percent in January, while annual average wage growth, including bonuses, fell to 5.6 percent from 5.8 percent in the previous month.

DMO to issue N450bn FGN bonds

The Debt Management Office will be issuing three tranches of FGN bonds worth N450 billion for the month of May on Monday.

 

The issuance includes a new nine-year N150 billion bond alongside reopenings of five- and seven-year bonds, each valued at N150 billion.

 

At the last auction in April, DMO sold N626.8 billion across the three bonds offered, with the stop rates for the longest tenure at 20 percent.

 

The government frontloaded a substantial part of its 2024 borrowings in the first quarter.

 

The second quarter bond auction calendar suggests that the government aims to raise between N300 billion and N600 billion monthly compared to the 2.5 trillion borrowings in the first quarter.

 

OPEC: monthly oil market report for April

The Organisation of the Petroleum Exporting Countries (OPEC) will release its monthly oil market report for April on Tuesday.

 

In March, Libya overtook Nigeria to emerge as the top African crude oil producer.

 

Nigeria recorded an output of 1.23 bpd in March, the lowest since July 2023, down from 1.32 million bpd in February.

 

The drop of almost 91,000 bpd, according to direct communication to OPEC, underscores the difficulties the Nigerian oil sector faces, such as limited infrastructure, security breaches in oil-producing areas, and operational hiccups.

 

Experts said large-scale oil theft from pipelines and wells has been one of President Bola Tinubu’s biggest challenges in recent years, dampening government finances and limiting the country’s output and exports.

 

In recent years, Nigeria has recorded a surge in pipeline vandalism and crude oil theft incidents in its oil-producing region, a development that has worsened the nation’s revenue challenge.

 

NBS to release April inflation report

 

 

The National Bureau of Statistics will be releasing the April inflation figures.

 

The Financial Derivatives Company has projected that inflation will hit 32 percent, further squeezing the purchasing power of citizens and fueling a cost-of-living crisis.

 

In March, Nigeria’s consumer price accelerated to 33.2 percent, a 15-month consecutive increase.

 

 

Inflation has continued to rise due to high energy costs, the impact of exchange rate fluctuations, and persistent insecurity concerns in the country, which are affecting agricultural activities.

 

To fight inflation, Olayemi Cardoso, the governor of the central bank, has hiked the country’s benchmark interest rate by a combined 600 basis points to 24.75 percent from 18.75 percent last July.

 

 

Cardoso has equally ramped up efforts towards stabilising the exchange rate fluctuations, which saw the naira appreciate steadily against the dollar from about N1,900 per dollar in February to around N1000/$ in April and has now plunged back to N1400/$.

 

Though the FDC predicts that inflation is set to peak in May or June, it noted that a decline is certain after the wage review by the federal government.

 

US inflation report

The U.S. Bureau of Labour Statistics will be releasing the April Consumer Price Index.

The US inflation rose faster than expected in March to 3.5 percent, in a sign that the fight to slow inflation has stalled and interest rate cuts could take longer than planned.

 

That’s a cause for concern for emerging markets, which need lower US interest rates to be more attractive to foreign portfolio investors.

The US Consumer Price Index report showed that prices rose 3.5 percent in March from 3.2 percent in February, the US Labour Department said.

On a monthly basis, prices rose 0.4 percent in March, higher than expectations of a 0.3 percent increase.

This marked the third month in a row that inflation exceeded expectations. Higher costs for fuel, housing, dining out, and clothing drove the increase.

 

UK unemployment data for February:

The UK Office for National Statistics will be releasing the unemployment rate for March.

The unemployment rate rose to 4.2 percent in February from 3.9 percent in January, while annual average wage growth, including bonuses, fell to 5.6 percent from 5.8 percent in the previous month.

The Bank of England has waited to see signs that wage growth is slowing before making a move to reduce interest rates and is expected to view the latest figures as another reason to begin that process this year.

The unemployment rate measures the percentage of the total workforce that is not working yet actively seeking employment. In the U.K., this measure spans the prior three months.

 

A reading that is higher than the current is generally negative for the pounds, while a lower-than-forecast reading is generally supportive for the pounds.

 

The naira continues to fall amid rising demand for dollars.

 

The naira has continued to plummet against the dollar as end users need the greenback.

 

Last Monday, the naira traded at N1,430 to a dollar on the street, while at the official window, it came in flat at N1,400.

 

 

However, as of Thursday, the local currency depreciated and was exchanged at N1,459.73 per dollar, data from FMDQ showed.

 

On the black market, it also fell to N1,440/$, buoyed by the increased demand for the scarce dollar.

 

Traders who spoke to BusinessDay attributed the naira weakness to increased demand for the greenback by end users who want to travel for business, tourism, health, or education.

 

“We expect the naira to be exchanged within the current band, barring any shocks,” analysts at Afrinvest Securities Limited told BusinessDay.

 

Other Financial news Headlines today May 13, 2024

Standard Bank projects $5.1bn capital inflows in second half of 2024

NNPC, Natural Oilfield Service hit first oil in OML 13

Tax trouble or trust trouble’ Why reform must go beyond numbers

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