Breakfast Report - 05 February 2024
Last week, we saw a sizeable devaluation at the Nigerian Autonomous Foreign Exchange Market (NAFEM). This followed the circular sent to clamp down on the under-reporting of transaction rates at the NAFEM. This saw the Naira get devalued by 25% on January 30, 2024. Thereafter, the apex bank also clamped down on banks’ appetite for foreign currency exposure by ensuring matching of foreign currency assets and liabilities to prevent speculation. We believe these measures are to aid price discovery in the official market and prevent sizeable foreign exchange gaps from re-emerging. However, Nigeria needs increased foreign exchange supply to anchor its decisions.
Equity: Last week, sentiments remained positive, as investors continued to pick up fundamentally sound names at lower prices. So, we expect a mixed start to this week, as the market anticipates more earnings report.
Fixed Income: For this week, we expect a tepid trading session with a bearish bias even as market players look forward to confirmations of higher rates.
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