Written by: Lukman Otunuga, FXTM Research Analyst
The Nigerian Naira was basically flat on the forward markets,
despite the Dollar depreciating on expectations that the Federal Reserve will
be adopting a dovish stance this week.
Investors with an interest in the Naira will be closely monitoring
the FOMC meeting this week, which has the potential to impact the emerging
market currency. Buying sentiment towards the Naira is likely to jump if the
Federal Reserve adopts a dovish stance towards rates and expresses concerns
over the US economy.
The Naira also remains influenced by Oil prices, as a fair chunk
of Nigeria’s export revenues come from Oil sales. Although rising Oil prices
will be a welcome development for the Naira in the near-term, the currency’s
outlook remains impacted by domestic conditions at home and geopolitical risk
factors across the globe. The next major event risk for the Nigerian economy
will be in Central Bank of Nigeria’s interest rate decision next Tuesday. Will
the CBN drop hints of a possible rate cut some time in the future? This is a
question on the minds of investors.
Brexit chaos deepens as
Commons Speaker derails third vote on May’s deal
The British Pound fell yesterday afternoon after the House of
Commons Speaker John Bercow essentially banned Theresa May’s Brexit deal from
getting a third vote. Although prices later recovered, this once again
highlights the tremendously fluid Brexit equation that markets have to contend
with. Now, all eyes turn to the summit in Brussels on Thursday, where EU
leaders will have their say on an extension to Brexit. It’s key to note that
the extension has to be unanimously agreed upon by all 27 member nations before
a no-deal Brexit can be safely removed from the table; should just one of the
EU members reject reasons for the deadline extension, the Pound will most
likely find itself exposed to significant downside risks.
With the prolonged moving nature and fluidity of the Brexit
situation weighing heavily on sentiment, Sterling remains at risk of unwinding
its year-to-date gains. Still, the base
case that markets are pricing in is one of a delayed Brexit, which may only
happen in 2020. However, as we have learned in recent weeks more time may not
wholly be a good thing, as it could also bring about extended periods of
uncertainty and potentially more permutations to the final Brexit outcome.
Barring any more surprises, expect the Pound to trade range-bound this week.
Commodity spotlight –
WTI Oil
WTI Crude found comfort near its highest levels so far this year,
after OPEC+ assured markets that its members will stick to the output cuts
through the first half of 2019. Saudi Energy Minister Khalid Al-Falih says
there remains a “significant glut” in global supplies which still needs to be
drawn down before considering scaling back on production cuts, a move that’s
supportive of Oil prices. OPEC+ producers need to demonstrate unified efforts
in their attempts to rebalance the Oil markets and to have any chance of
offsetting record US Shale production.
Between now and the OPEC meeting scheduled to take place in Vienna
in June, markets will certainly be closely monitoring indicators on global
supply and demand. With US shale production still robust as ever, oversupply
fears are likely to linger in the background. However, sanctions on other Oil
producers, namely Iran and Venezuela, may sooth such concerns. Meanwhile on the
demand side, should global growth show more obvious signs of faltering, this
may open up more downside for Oil.
Have you heard this? Many Nigerian exporters have been defrauded of huge amount of money in the process of exporting commodities to foreign countries. Do you know why? They were not trained on export operations, management, documentations and the best methods of payment in export trade. This is terrible!!! Nigerians cannot continue to lose money to foreigners in the course of export business. Exporters, why don’t you get a practical manual that teaches the stages of export trade from processing and packaging of commodities to receipt of payment by the foreign buyers. It teaches export operations, export management, export documentations and methods of payment in export trade? It is a contemporary step-by-step guide to export trade. It tells all the contemporary dynamics in export trade. To get it, click on the link below:
http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
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