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Breakfast Report - 07 June 2021
| Since the adoption of the Nigerian Autonomous Foreign Exchange (NAFEX) rate as the official exchange rate, the Naira has been running out of steam in the parallel market. While controversies on the huge spread enjoyed by Bureau De Change operators were debunked, news reports show BDC operators imposed a ban on street hawking to stem the slide in the exchange rate. In our view, we believe the free fall in the parallel market rate can be attributed to pent-up demand for dollars by both legitimate users and speculators. Should the Naira fall beyond ₦500, we could see the CBN unleash some FX policies to check arbitrage and stem the falling tide in the Naira, even as the Bank aims at unifying the exchange rates. | |||||
| Equity: Following consecutive positive sessions and some capital appreciation especially among the small-cap stocks, we believe that investor sentiment is on a positive path. However, we do not rule out the possibility of some profit-taking at this week’s trading. | |||||
| Fixed Income: This week, we expect the market to trade in a similar fashion as investors’ focus shifts to the upcoming NTB auctions. Meanwhile, we expect tepid trading across the bonds and OMO segments as investors continue to monitor market developments amid weak liquidity levels. |
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