Vanguard Markets | Monday, February 23, 2015 | Issue 030
We view the closure of the rDAS window as a positive development which has moderated the level of uncertainty and apprehensiveness in the FX and capital market regarding possible direction of CBN on exchange rate management. - Afrinvest, February 20, 2015
POSITIVE OUTLOOK
Consumer confidence holding up Consumers are not as pessimistic about the economy as the pundits would have Nigerians believe. Three polls, one international and two local, show that Nigerian businesses and consumers are more upbeat about the economy than they are given credit for. This is not to say that optimism alone is evidence of how things will turn out. It does, however, send a strong message about a continuing faith in the economy and its managers. HE LATEST NOIPolls Consu mer Confidence Index, Nielsen 2014 Consumer Confidence Survey, and FBN Manu facturing Purchasing Managers’ Index (PMI) have thrown up some surprises. Contrary to newspaper headlines and talking heads claims on the dismal state of the economy, the polls show Nigerian businesses and consumers are feeling upbeat. Rising confidence is proof of the resilience of confidence in Africa’s largest economy. This comes in the face of falling oil prices, a battered stock market, and declining foreign exchange rates. The prevalence of optimism among Nigerians about the economy has been commented on before. For example, the Mas terCard Consumer Con fidence Index released in November 2014 showed that Nigeria has the highest consumer confidence in Africa with a score of 96.9. Consumer confidence in Morocco (79.6), South Africa (58.7) and Kenya (38.8) lags behind. The MasterCard survey was conducted between July 2014 and August 2014 on 12,205 respondents aged 18 – 64 in 27 countries within Asia/Pacific, Middle East and Africa.
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Rising confidence is proof of the resilience of confidence in Africa’s largest economy Business confidence not slowing down FBN Capital begun publishing its Purchasing Managers’ Index in May 2013. Since then, it has carried out the survey every month, now in its 21st edition. FBN, an investment bank, describes the index as a temperature gauge of the manufacturing sector and the only one of its kind in Nigeria.
Adopting a base of 50 for unchanged, above 50 for better, and below 50 for worse, the December 2014 results
show a ‘robust pickup’ of the headline reading to 60.4, a gain 4.6 points above 55.6 recorded in November. The
survey also showed three of the five sub-indices (SI) had risen. The Output SI fell to 56 ↓5.08%, Employment SI rose to 58 ↑18.37%, New Orders SI was unchanged at 62, Suppliers’ Deliv ery Times SI climbed to 62 ↑10.71%, and Stock of Pur chases SI increased to 64 ↑20.75%. The report offered four vital takeaways. If the federal government’s power roadmap leads to the improvement in electricity supply to match demand, analysts at FBN Capital are of the opinion that it could add up to 2 per cent to the country’s GDP. They also cited comments by Dr. Ngozi Okonjo-Iweala, the minister of finance and coordinating minister of the economy, that insecurity in the northeastern parts of Nigeria has shaved off half a percentage point off the gross domestic product. The authors of the PMI survey report note that it is yet early days to determine with precision the impact of the new normal instigated by the Central Bank of Nigeria’s decision to raise the policy rate by 100 basis points to 13.00 per cent, and the cash reserve requirement (CRR) on banks’ private sector deposits by 500 basis points to 20.00 per cent.
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FOREX RATES
$/N
198.5
199.0 191.0 183.0 175.0 167.0 Fr
Mo
Tu
£/N
We
Th
Fr
306.8215
307.0 294.0 281.0 268.0 255.0 Fr
Mo
Tu
Euro/N
We
Th
Fr
226.1312
228.0 218.0 208.0 198.0 188.0 Fr
Mo
Tu
CNY/N
We
Th
Fr
31.7311
33.00 31.00 29.00 27.00 25.00 Fr
Mo
Tu
CFA/N
We
Th
Fr
0.2813
0.31 0.30 0.29 0.28 0.27 Fr
Mo
Tu
We
Th
Currency
Central Rate
SWISS FRANC
209.4766
YEN
1.6678
WAUA
236.8847
RIYAL
52.9108
DANISH KRONE
30.3730
SDR
280.5996
Fr
FIXED INCOME & FOREX
Source: FMDQ