Weekly Economic Update (June 17th – 21st)

Key Economic Events

  • BOE threads with caution despite inflation hitting 2% target

The Bank of England, at its June meeting, left its interest rate unchanged at 5.25%, the level it has been since August 2023. This move was despite the moderation in inflation to 2% in May, aligning with the Central Bank’s target. Notably, seven of the nine members in attendance voted to hold while two advocated for a decrease to 5%, indicating that a rate cut could be as early as August. Acknowledging the slowdown in inflation and a cooling labor market, the committee emphasized the importance of retaining a restrictive stance until the risk of inflation surpassing the Central Bank's target diminishes sustainably. The committee pledged to closely monitor ongoing inflationary pressures and make policy adjustments based on forthcoming economic data.


The decision to maintain the status quo and potential rate cuts holds considerable implications for Nigeria. Firstly, it would lower the burden of servicing external obligations, easing financial pressures on the government and enhancing infrastructure funding. Nigeria's external debt service cost rose to $1.12 billion as of Q1’24, an increase of 39.75% from $801.36 million a year earlier. Additionally, the UK represents a significant source of diaspora remittances for Nigeria. Reduced interest rates will decrease debt servicing expenses for Nigerians residing in the UK, potentially leading to increased diaspora remittances to Nigeria.

Market Update
  • Oil market - Bullish market sentiment amid seasonal demand and falling stockpiles

Oil prices were largely bullish during the review period due to seasonal demand and a drop in US inventories. According to the U.S. Energy Information Administration (EIA), crude inventories fell by 2.5 million barrels to 457.1 million barrels in the week ending June 14. The cooling job market also boosted hopes that the Fed Reserve could begin rate cuts soon. Remarkably, Brent crude price traded above $85 per barrel in four of the five trading days, a level last seen two months ago. On average, oil prices rose by 3.43% to $85.12 per barrel, up from $82.3 per barrel in the preceding week.

Screenshot 2024-06-26 at 11.27.31.pngOutlook

Oil prices are likely to remain elevated due to increased summer demand and a growing geopolitical risk premium driven by conflict in the Middle East.

  • Forex market - Naira steadies within a range of N1,470/$ - N1,510/$

The Naira seems to have stabilized around a new psychological range of N1,470/$ to N1,510/$. So far in June, the currency has been trading between N1,470/$ and N1,510/$ in the parallel market, and between N1,473.66/$ and N1,488.6/$ at the NAFEM window. The Naira recorded volatile trading during the week under review in the parallel market. It started the week at N1,500/$, before appreciating slightly to close the week at N1,490/$. At the NAFEM window, the currency depreciated steadily to close the week at N1,485.53/$ from N1,476.24/$ at the beginning of the week. The gross external reserves gained 0.9% to close at $33.64 billion on June 20 from $33.34 billion on June 14.

Screenshot 2024-06-26 at 11.27.43.pngOutlook

The Naira is likely to remain at current levels, pending the disbursement of the World Bank loan. Meanwhile, the anticipated appreciation is expected to be short-lived as the economy needs a sustained inflow of dollars.

Money Market

The liquidity position of banks improved during the review period although it slipped into the negative territory in one of the three trading days. On average, banks’ opening position was N316.15 billion long compared to a short position of N132.46 billion in the preceding week. The improvement in liquidity position led to a drop in average short-term interest rates (OPR/ON) to 25.51% from 29.48% in the previous week.

Screenshot 2024-06-26 at 11.27.57.pngOutlook

We expect interest rates to remain at current levels until there is a major injection/withdrawal from the system.

  • Fixed Income Market

There was a predominantly negative sentiment in the FGN bond market as the average benchmark yield increased by 0.06% to close the week at 18.69% from 18.63% in the prior week. Investors continued to selectively pursue higher yields across various maturities, leading to selling pressures particularly in the middle and longer tenors of the yield curve, although there were some buying interests noted in shorter-term bonds. The average benchmark yield on Treasury Bills decreased by 0.03% to close the week at 21.77% compared to 21.80% in the previous week. Market sentiment remained largely positive throughout the week, with active buying observed for the August and October bills, although there were few corresponding sell offers. Conversely, there were ample sell offers for the November, February, and April bills, while demand from buyers was limited.


Investors are likely to turn their attention to developments surrounding the June FGN bond primary market auction. The outcome of this auction is expected to shape market sentiment and dictate the direction of yields in the near term.

  • Stock market - bearish market sentiment

The Nigerian equities market was somewhat bearish during the review period as the market lost in two of the three trading days. Compared to the preceding week, the NGX ASI lost 0.18% to close at 99,743.05 points on June 21 from 99,925.29 points on June 14. Similarly, market capitalization lost 0.19% to close the week at N56.42 trillion from N56.53 trillion the preceding week. This was partly due to the system-wide liquidity squeeze.

Screenshot 2024-06-26 at 11.28.10.pngThe average traded volume increased sharply by 67.13% to 1.1 billion units from 658.3 million, while the average traded value spiked 62.12% to N17.72 billion from N10.91 billion. Market breadth for the week was positive as 49 stocks gained, 24 lost, and 66 remained unchanged. CHAMPION topped the gainers' list with a 32.54% increase, closing at N3.91 per share. VERITASKAP followed with a gain of 31.08% to close at N0.97 per share, while CHAMS rose by 23.16% to close at N2.34 per share.

Screenshot 2024-06-26 at 11.28.39.png The laggards were led by VFDGROUP (-19.96%), NEM (-17.28%), REGALINS (-10.64%), TRANSCOHOT (-9.98%) and MULTIVERSE (-9.68%).

Screenshot 2024-06-26 at 11.28.54.pngOutlook

We expect that investors will persist in making strategic investments in stocks poised for growth.


Money Market

Stock Market

Forex market

Fixed Income Market

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