Commentary

Last week was an eventful one for the global and domestic economy as we move towards the end of the first quarter of 2023. In the global space, the US Federal Reserve raised the federal fund rate by 25bps to a range of 4.75% – 5.00%, signaling an end to its aggressive rate hikes amidst the banking sector crisis. Locally, the DMO had a successful bond auction in March, raising N563bn which exceeded its planned target of N360bn, with strong demand seen across four different bond maturities. Likewise, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) increased the MPR by 50bps from 17.5% to 18% in March 2023, making it the second consecutive hawkish tone this year, albeit less aggressive compared to January. Other notable domestic happenings last week were the latest data on currency in circulation, equities market update and happenings in the currency space.

Last week in Nigeria, the DMO conducted its NTB auction for March, which was oversubscribed due to strong demand. Foreign trade decreased in Q4’22 due to a decline in import trade, but increased by 31.8% YoY. Nigeria’s composite PMI sank to 44.7 in February, ending a 32-month expansion sequence, largely due to cash shortage and fuel shortages. The Nigerian equities market closed bullish, while the naira appreciating in the parallel market. In the US, Silicon Valley Bank collapsed, and the latest job numbers showed that US employers hired more workers than expected in February. The FED will consider these circumstances in their upcoming meeting on whether to hold or raise interest rates.