Macroeconomic Report & Economic Updates

October 4, 2016

Nigeria Economic Update (Issue 41)

The
naira continued its downward trajectory in the review week. Specifically, naira
depreciated significantly at the parallel segment by 3.5 percent to a record
low of N440/$ on September 23, 2016. Notably, this was driven by
the worsening liquidity constraints at the interbank market which left the
excess forex demand to be sourced at the parallel market, and thus exerted
downward pressure on the naira. The naira is likely to further
weaken given that most of the liquidity constraints are exogenously determined
and thus forex supply will likely remain subdued by its demand.

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Nigeria Economic Update (Issue 20)

The Naira maintained slight appreciation against the dollar in the review week. At the parallel market, the value of the Naira appreciated week-on-week by 1.6 percent to exchange at N380/$ on May 19, 2017. In addition, inter-bank market rate appreciated slightly by 15kobo to N305.45/$. The appreciation in both segments of the market are favorable effects of the CBNs continued forex supply in the week under review (In a bid to further ease forex liquidity, the CBN pumped a total of $457.3 million on May 15, 2017).

Nigeria Economic Update (Issue 20)

Power sector analysis shows an increase in power generated by 15.5 percent from 3639.2 megawatt to a peak of 4196.2 megawatt between April 22, 2016 and April 29, 201612, albeit a sharp fall to 25.2 megawatts on April 23, 2016 following a system collapse13. In a bid to attain the targeted 10,000 megawatts by 2019, the Federal Government is set to complete the ongoing 47 power transmission projects across the country, which would boost power supply14. However, the delays in passing the budget into law is a major constraint to the completion of the projects. Thus government needs to speed-up the passage of the 2016 budget to provide the funds to complete the projects.

Money Supply And Lending Rate

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Nigeria Economic Update (Issue 7)

External reserve dropped slightly by 0.6 per cent from $28.35 billion in January 22 to $28.19 billion in January 295. Considering the continuous decline, government has stepped up efforts towards financing the deficit in the proposed budget through borrowing. At the forex market, the official exchange rate remained unchanged at N197/$ while the naira depreciated at the parallel market by 2.36 percent from N297/$ to N304/$ between January 22 and 296. Despite the huge spread between the official and parallel market exchange rates, the monetary authorities maintained its fixed exchange rate regime at the official forex market. It is expected that if the demand pressure for dollar persists, the value of naira may decline in the near term.