Taiwo Adekeye, FMVA
January 23, 2024
Oil prices increased by approximately 2% due to global energy supply concerns, triggered by a Ukrainian drone strike on Russia’s Novatek fuel terminal. Simultaneously, ongoing extreme cold weather posed challenges to U.S. crude production. Brent March crude futures closed at $80.06 a barrel, up by 1.9%. While front-month U.S. West Texas Intermediate crude futures contract (WTI) for February delivery closed at $75.19, up by 2.4%, as the contract expired.
Kenya: IMF authorizes $941 million lending boost to Kenya
The International Monetary Fund (IMF) on Wednesday approved a $941 million lending boost to Kenya, with an immediate disbursement of $624.5 million, lifting off burdens from the East African country as it battles financial pressures. Kenya is battling with acute liquidity challenges amid uncertainty over its ability to access funding from financial markets before a $2 billion Eurobond matures in June. However, Kenya’s balance of payments and financial positions have also been strained by the legacy of the COVID-19 pandemic and frequent climate change-induced droughts, while its shilling currency has weakened.
Ethiopia: Ethiopia welcomes foreign investment firms in anticipation of its capital markets launch
Ethiopia is preparing to issue licenses that will enable foreign investment banks to operate within the country, a major move ahead of its planned launch of a securities and exchange later in the year. The outstanding initiative has drawn foreign investors like Kenyan telecoms operator Safaricom, but encountered recent setbacks due to unpredictable regulatory environment, security concerns and macroeconomic instability. The ministry of justice has authorized the capital markets regulator to go ahead with issuing the license this week. There are currently no investment banks in Ethiopia, and commercial banks are only able to offer limited funding to businesses due to prudential requirements.
South Africa: The South African Rand is facing a decline ahead of rate decision.
South Africa’s rand weakened against the USD as traders prepare ahead of inflation data and the central bank’s first rate decision of the year. The rand traded at 19.1575 against the dollar, 0.64% weaker than its previous close. However, the dollar was down about 0.12% against a basket of global currencies. Consumer inflation was at 5.5% in November and is expected to average 5% in 2024. South Africa’s benchmark 2030 government bond was stronger, with the yield down 5 basis points at 9.715%.
India: Monetary policy to focus on disinflationary measures.
Monetary policy in India must remain actively disinflationary despite the recent sharp fall in core inflation, a statement by the Reserve Bank of India Governor Shaktikanta Das at the World Economic Forum in Davos. Annual retail inflation rose by 5.69% in December, the fastest in the space of four months but core inflation dropped to a four-year low of 3.8% from around 4.1% in November. The central bank would like to continue to build foreign exchange reserves, which currently stand at near 22-month highs of $617 billion, as it wants to wade off the large depreciation pressure seen on the rupee due to sudden capital outflows witnessed during the 2013 taper tantrum.
China: Beijing sets 2024 growth target higher despite economic slowdown
China’s capital city Beijing has set a growth target of about 5% for the year 2024, surpassing last year’s target of above 4.5%, despite expectations of slower growth for the national economy. The economy of the capital city improved by 5.2% in 2023, in tandem with the national economy, which has so far posted feeble post-pandemic growth amid a deepening property crisis, mounting local government debt and persistent deflationary risks. The target of around 5% is needed to stabilize expectations and boost confidence, to achieve important livelihood goals such as employment and household income,
