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Breakfast Report - 29 April 2024

The Nigerian foreign exchange market was thrown into a frenzy this week after weeks of relative calm and rapid appreciation in the exchange rate. According to the CBN, Nigeria recorded its best FX turnover in 7 years, a feat, which culminated in the Naira’s emergence as the best-performing currency globally. In a shocking turn of events, the Naira halted its gains and depreciated by 19.6% last week. This can be attributed to the profit-taking activities of foreign portfolio investors, following the record c.44% appreciation of the Naira in Q1’24. We also regard fears concerning the c.$1.8 billion depletion of reserves as a plausible reason for the depreciation. However, we expect interventions from the CBN to moderate FX pressure over the near term, while inflows of c.$4 billion from multilateral institutions and commercial creditors allay currency fears within the next three months.

Equity: All in, we saw investors adopt a wait-and-see approach to the market last week, as their focus shifted to company earnings for Q1’24. In this new week, we expect to see a flurry of earnings releases, and this will dictate sentiment in the market; that said, we envisage a mixed start to the week from today, Monday.

Fixed Income: In today’s trading session, we expect more bullish pressures in the NTBs market as coupon inflows and FAAC credits come into the system. Meanwhile, we expect a tepid session in the Bonds market barring any change in fundamentals.