Oil Dips, Posts Weekly Decline Amid Delay In US Rates Cut

Taiwo Adekeye, FMVA

February 26, 2024

Oil prices fell close to 3% on Friday and registered a weekly decline after a U.S. central bank policymaker indicated that interest rate cuts could be delayed by at least two more months. However, the Fed has held its policy rate steady in a 5.25% to 5.5% range since last July. Brent crude futures dipped by 2.5% to close at $81.62 a barrel, while U.S. West Texas Intermediate crude futures (WTI) were down by 2.7% closing to $76.4

Ghana: Ghana’s cocoa output for 2023/24 is expected to fall nearly 40%

The cocoa output for Ghana in the 2023/24 season is forecasted to be nearly 40% below the target of 820,000 metric tons. The major limiting factors sponsoring this shortfall is Strong seasonal winds, a lack of rain, smuggling, damage caused by illegal gold mining, and swollen shoot disease. The second largest cocoa producer in Africa has lost about 150,000 tons of cocoa to smuggling and illegal gold mining known locally as galamsey in the 2022/23 season. However, big efforts are put in place to halt these limiting factors affecting cocoa production and parts of the efforts is the serious collaboration with the security agencies to arrest smugglers

Malawi: Malawi projects improved growth as forex reserves gains strength

Malawi projects its economy to improve by 3.2% in 2024, up from 1.5% last year, as its foreign exchange reserves strengthens. The southern African country devalued its currency last year by about 30% to battle foreign-currency shortages that have led to a lack of fuel, medicines and fertilizers. Economic growth would be driven by Large-scale farming and anticipated growth in construction, manufacturing and other sectors. The budget deficit for the 2024/25 fiscal year starting in April is projected to be 1.43 trillion kwacha ($858 million), which is approximately 7.6% of Malawi’s GDP, compared to 1.36 trillion kwacha (8.9% of GDP) in 2023/24. Conclusively, the International Monetary Fund approved a loan of about $178 million in November, indicated that Malawi needs almost $1 billion in debt relief by 2027.

South Africa: The Rand continues to decline after the budget announcement.

The South African rand weakened on Friday, extending the previous day’s losses to hit its lowest level since October. The Rand traded at 19.3650 against the USD, almost 1% weaker than its previous close while the dollar index was up about 0.03%. The government is set to draw down 150 billion rand ($7.8 billion) from contingency reserves at the central bank over the next three years to limit rising debt but the government has offer little reforms in the way of stagnant economic growth amid unemployment.

China: China’s new home prices continue to decline amid policy support

China’s new home prices showed a slowdown in month-on-month declines in January. The largest cities experienced some stabilization, but the nationwide downward trend persisted even as the nation’s effort to revive demand continues. However, new home prices fell by 0.3% month-on-month in January after dipping 0.4% in December. China has intensified measures to fight property downturn and has directed state banks to increase its lending to residential projects through a “whitelist” mechanism. Additionally, several major cities, including Shanghai, have relaxed purchase restrictions in an effort to attract more homebuyers. The property market has been struggling since 2021 due to string of defaults among developers dealing with excessive leverage.

India: The Rupee posts second weekly gain but weakens on Friday due to heightened demand for dollars from importers.

The Indian rupee dipped on Friday due to dollar demand from importers and oil companies, but weekly gains was driven by foreign fund inflows into the share and bond markets. The Rupee had risen to a three-week high of 82.8350 on Thursday but was unable to break past the key resistance level of 82.80 last week, despite inflows amid likely intervention from the Reserve Bank of India (RBI). However, the rupee ended at 82.9375 per U.S. dollar compared with its close of 82.84 in the previous session.