Wednesday, 27 November 2019

NIGERIA – WEEK AHEAD


This will be a busy week for the Nigerian economy as the nation publishes updates its latest current account balance for Q3 and central bank interest rate decision for November.

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The nation recorded a current account deficit of $2.9 billion during the second quarter of 2019. While a deficit is not necessarily bad, it does suggest that a country’s liabilities exceed its foreign assets. Given how Nigeria imports more than it exports, there is a risk of the nation experiencing another deficit in Q3 – an outcome that could prompt foreign investors to call for a Naira devaluation. 

There will be a strong focus on the Central Bank of Nigeria (CBN) interest rate decision on Tuesday. Given how inflationary pressures are making an unwelcome return, the CBN may think twice before cutting interest rates from 13.5%. Should the CBN governor adopt a cautious tone and express concerns over the Nigerian economy, investors may re-evaluate the possibility of monetary policy easing during the first half of 2020.

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Outside of Nigeria, market sentiment is set to be dictated by ongoing US-China trade developments and economic data from the largest economy in the world. The US Q3 GDP revision and consumer confidence report should offer insight into the health of the US economy. If the Dollar finds support from encouraging domestic fundamentals, emerging market currencies including the Naira are likely to feel the heat.

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