•FMDQ FX market turnover dips by 56.2%
Consumer price level is projected to settle at 30.34 per cent year-on-year (y/y) in February 2024. According to analysts at Cordros Capital Research, the impact of the heightened conflicts in the North and the rising transport costs are expected to undermine food access and disrupt distribution networks over the short term, amid the traditionally high purchase reliance for food during the post-harvest period across the country.
“At the same time, we expect the persistent currency pressures and elevated energy costs to keep the pressure on the core basket intact. Accordingly, we forecast consumer prices to settle at 30.34 per cent y/y in February,” they said.
The analysts stated that the increased consumer prices synchronised with the effect of chronic FX pressures, high food demand-supply gap, mainly attributable to below-average harvests and elevated diesel and gas prices.
Accordingly, they noted that broad-based pressures across the food inflation (+148bps to 35.41 per cent y/y) remained at a 19-year high whereas core inflation rose by 53bps to 23.59 per cent y/y.
On a month-on-month (m/m) basis, the consumer prices surged by 35 basis points (bps) to 2.64 per cent (December 2023: +2.29 per cent m/m) the highest point in five months.
In addition, Cordros Capital Research, unveiled a three-year regulatory action plan (RAP) for Nigeria’s upstream oil and gas sector aimed at increasing crude oil production (including condensates) volumes to 2.60mbpd by 2026.
However, it argued that frequent leaks from pipelines and intermittent oil terminal shutdowns for repairs could pose downside risks to crude oil production in the near term despite the FG’s efforts to combat crude oil theft and vandalism.
“As a result, we maintain our estimate that crude oil production (including condensate) will settle at an average of 1.59 mb/d in 2024E (vs FGN’s estimate: 1.78mb/d),” it stated.
Meanwhile, in the foreign exchange (FX) spot and derivatives markets, the total turnover for the week ending on February 16, 2024, was $1,065.66 million, representing a decrease of 56.2 per cent ($1,369.47 million) from $2,435.13 million reported for the previous week.
According to FMDQ Securities Exchange, the week-on-week (w/w) decrease in the total turnover was driven by the 48.2 per cent ($990.63 million) and 99.41 per cent ($378.84 million) decreases in FX Spot and FX derivatives turnover, respectively.
The exchange stated that the w/w decrease in FX derivatives turnover was solely driven by the 99.4 per cent ($378.84 million) decrease in FX forwards turnover. There were no trades executed in either the exchange-traded FX futures or cleared naira-settled non-deliverable forwards (Cleared USD/NGN NDFs) markets.
In the FX Spot market, the total value of transactions for the week ending on February 16, 2024, was $1.063 billion, representing a decrease of 48.23 per cent (990.63 million) from the value of transactions executed in the week ending on February 9, 2024 ($2.05 billion).
