Weekly Economic Update (April 29th – May 3rd)

Key Economic Events

  • Federal Reserve Leaves Interest Rates Unchanged

During its latest Federal Open Market Committee (FOMC) meeting on May 1st, the Federal Reserve unanimously voted to keep its policy rates unchanged at 5.25% - 5.50%, marking the sixth consecutive meeting of maintaining the status quo. This decision was driven by concerns about inflation and the tight labour market. Although the Fed has succeeded in lowering inflation from its peak of 9.1% in June 2022, recent data indicates a halt in progress towards reaching the Fed's inflation target of 2%. In March, US inflation rose for the second consecutive month, reaching 3.5% from 3.2% in February.

The Fed chair notably emphasized that a rate hike might not be imminent, as the current policy stance is deemed appropriately restrictive. Additionally, the Federal Reserve announced plans to gradually reduce its quantitative tightening starting in June. This adjustment involves scaling back the maximum amount of Treasury securities removed from the balance sheet by nearly 60%, reducing it to $25 billion per month from the previous $60 billion.


Even though the Fed Chair has stressed that a rate hike may not be on the horizon, the current high interest rates will continue to support capital flight from emerging markets such as Nigeria. Presently, the inflation-interest rate differential in the US stands at 1.67%, indicating a positive real rate of return, whereas in Nigeria, it sits at -12.5%, indicating a negative real rate of return. It is also worth mentioning that elevated interest rates in the US will push up debt servicing costs for emerging markets.

  • Fitch Upgrades Nigeria’s Credit Outlook

Fitch Ratings, a prominent global rating agency, has upgraded Nigeria's economic outlook from stable to positive, following a similar move by Moody’s in December 2023. This positive adjustment primarily reflects significant reforms implemented over the past year aimed at restoring macroeconomic stability and improving policy coherence and credibility. These reforms have mitigated distortions resulting from previous unorthodox monetary and exchange rate policies, leading to notable inflows into the official foreign exchange (FX) market. However, Fitch highlighted potential short-term challenges such as high inflation and recent FX market volatility, noting that the lack of clarity regarding net FX reserve size constrains the country's credit profile. The agency anticipates further increases in the CBN monetary policy rate in the latter half of 2024 and a strengthening of monetary policy transmission. Consequently, inflation is forecasted to average 26.3% in 2024 and 18.2% in 2025.


An upward revision in Nigeria’s credit rating will boost investor confidence in the Nigerian economy. This could attract more foreign investment into the country as investors perceive reduced risks and higher potential returns. With a positive credit rating, Nigeria may also enjoy lower borrowing costs when accessing international capital markets. Lenders typically offer more favorable terms to countries with higher credit ratings, resulting in reduced interest expenses for the government when issuing bonds or seeking loans.

  • PMI

The Stanbic Purchasing Managers’ Index (PMI) inched up by 0.2% to 51.1 points in April from 51 points in March. This is the fifth consecutive month that the PMI reading has remained above 50 points. Notably, a PMI reading above 50 points signals an improvement in business conditions while a reading below 50 points shows deterioration. The slight uptick in the April reading, largely reflects the gradual deceleration in prices, following the appreciation in the exchange rate. After climbing to a record low of N1,915/$ in February, the Naira strengthened to a 5-month high of N1,055/$ in mid-April, before depreciating to close the month at N1,360/$. stanbic pmi The PMI reading comprises five sub-indices: new orders, output, employment, suppliers’ delivery times, and stock of items purchased. In April, the levels of output and new orders remained largely unchanged compared to the prior month, with business conditions still significantly affected by fluctuations in the naira and consequent price adjustments. Meanwhile, there was a slight improvement in overall employment in April following declines in February and March.


The PMI reading above 50 points in the last five months is an indication that real GDP growth will remain positive in the first quarter of 2024. However, the drop in the reading from 54.5 points in January to 51 points in February and March suggests that real GDP growth will remain tepid and likely to be non-inclusive.

Market Update

  • Oil market – Brent crude prices recover after hitting a 7-week low

Brent crude price maintained its downward trend in the first three days of the week, hitting a seven-week low of $83.44 barrels per day on May 1. This decline was attributed to concerns about a potential slowdown in US GDP growth and oil demand, prompted by the Federal Reserve’s decision to keep its benchmark interest rates unchanged, coupled with an unexpected boost in US oil inventories (up 1.61% to 460.9 million barrels). However, prices recovered thereafter, buoyed by expectations that OPEC+ would extend voluntary oil production cuts, alongside speculation that the drop in WTI prices to $79 per barrel might prompt the US government to replenish its strategic petroleum reserves, which were depleted in 2022. On average oil prices fell by 3.66% to $85.27 per barrel during the review period from $88.51 per barrel the preceding week. brent crude price


Oil prices are expected to remain elevated in the coming week on expectations of an extension in OPEC output cut and a forecast of a build-up in US strategic reserves. However, the prospect of a ceasefire agreement between Israel and Hamas is likely to reduce the geopolitical risk premium, leading to a decline in oil prices.

  • Forex market – Volatile trading as demand outpaces supply

At the parallel market, the Naira traded within a band of N1,340/$ - N1,380/$ during the review period. It lost 2.17% to close the week at N1,380/$ from N1,350/$ at the beginning of the week, partly due to dollar scarcity amid heightened demand. Meanwhile, the Naira appreciated to close the week at N1,400.4/$ at the NAFEM window after touching a 5-week low of N1,419.11/$ on April 29, supported by a boost in the level of activities in the market. Daily forex turnover rose by 36.56% to $201.88 million on May 3rd from $147.83 million on April 29. exchange rate Meanwhile, the gross external reserves continued its steady accretion, gaining 0.16% ($52.28 million) to close at $32.28 billion on May 2 from $32.23 billion at the start of the week.


The exchange rate is expected to continue its volatile trading in the coming week, driven by the demand and supply dynamics.

Money Market

For the first time in three weeks, the opening position of banks closed the week on a positive note at N19.61 billion on May 3rd, suggesting an ease in the tight liquidity conditions. Meanwhile, on a week-on-week basis, the average opening position was N275.72 billion short, an improvement from N759.26 billion short in the prior week. Consequently, short-term interbank interest rates (OPR and ON) fell by 4.00% and 4.17% respectively to close the week at 26.25% and 27.08% from 30.25% and 31.25% last week. Short term index


Short-term interest rates are likely to fall slightly in the coming week if the improvement in liquidity conditions is sustained.

  • Fixed income market

The average yield across the Federal Government of Nigeria (FGN) bond curve declined by 0.09%, concluding the review period at 18.75% compared to 18.84% the previous week. The majority of trading activity during the week focused on the shorter and intermediate segments of the yield curve, although there was some demand observed at the longer end, albeit with limited supply. Specifically, the FGN-2026 bond decreased by 20 basis points to 17.85%, the 30-year bond fell by 68 basis points to 17.77% while the FGN-2031 bond increased by 0.19% to 19.29%.

In the secondary treasury bill market, sentiment was predominantly bearish as the average benchmark yield rose by 13 basis points to close the week at 22.37%, compared to 22.24% the previous week. Notably, there were sell-offs at the longer end of the curve due to tight market liquidity, while investors selectively pursued attractive yields across the curve.


The Debt Management Office (DMO) has released a revised Q2 bond issuance circular, announcing the issuance of the 19.30%-FGN-2029, FGN-2031, and FGN-2033 bonds at the next primary market auction scheduled for May 13, 2024.

There will be a primary market treasury bill auction by mid-week, with marginal rates likely to remain at current levels. In the secondary market, we anticipate continued selling pressure, particularly at the longer end of the curve.

  • Stock market – Bearish sentiment as selloffs overtake buying activities

The Nigerian equities market rebounded last week, recording its first weekly gain (N812 billion) after six consecutive weeks of bearish trades. Notably, the market gained in three (3) out of the four (4) trading sessions.  The NGX ASI rose by 1.46% to close the week at 99,587.25 points from 98,152.91 points at the end of the prior week. Similarly, market capitalization increased by 1.46% to N56.32 trillion on May 3 from N55.51 trillion on April 26. This bullish trend was supported by optimistic buying attitudes towards certain high-value stocks as well as blue-chip companies with strong fundamentals. The impressive Q1 corporate results and the commencement of the dividend earnings season also supported the upward trend. All share index On a sectoral basis, performance was mixed as two of the five indices were positive while the other three were negative. The Banking and Insurance indices gained 9.42% and 0.98% respectively, driven by strong interest in financial stocks. Meanwhile, oil and gas lost 0.68%, followed by Industrial goods (0.36%) and consumer goods (0.3%). Scale performance Market activity showed a positive trend during the week. The average trading volume rose by 31.95% to 485.31 million units compared to 367.81 million units in the preceding week. Similarly, the average trade value increased by 19.12% to N8.16 billion from N6.85 billion in the preceding week.

Market breadth for the week was positive as 41 shares gained, 33 lost and 65 remained unchanged. FBNH topped the gainers’ list with a 32.68% increase in its share price, followed by STERLINGNG (27.75%), UACN (24.60%), JBERGER (23.76%), and FLOURMILL (20.66%). TOp 5 GainersThe laggards were led by NASCON (-17.03%), UPL (-16.67%), BERGER (-9.87%), VITAFOAM (-9.81%) and LINKASSURE (-9.47%). Top 5 losses


The equities market is likely to sustain its positive trajectory this week as investors position for dividend payments. However, higher yields in the fixed-income market could taper the expected rally.


Federal Reserve

Interest rate

Exchange Rate



Fixed Income Market

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