Taiwo Adekeye, FMVA
January 30, 2024
On Monday, oil prices slumped over a dollar per barrel due to concerns about China’s struggling property sector, making traders to reevaluate the supply risk premium amid escalating tensions in the Middle East. Brent crude futures fell 1.4% to settle at $82.40 a barrel, while U.S. West Texas Intermediate crude futures dropped by 1.6%, closing at $76.78 per barrel.
Ghana: Ghana central bank goes dovish on rate as inflation eases
Ghana’s central bank lowered its main interest rate by 100 basis points to 29% on Monday, its first rate cut since 2021, after inflation fell for the fifth consecutive month in December. The West African cocoa, gold and oil producer nation has been restructuring its debts as it tries to emerge from its worst economic crisis that saw inflation rocket beyond 50% in annual terms in late 2022. However, price pressures eased considerably over the second half of 2023, falling to 23.2% year-on-year in December, opens new tab from 26.4% in November and 35.2% in October.
Tunisia: Tunisian cabinet grants approval allowing the central bank to finance the treasury
The Tunisian cabinet authorizes a controversial bill allowing the central bank to finance the treasury, a major move aimed at financing the budget deficit but which reinforced fears over the bank’s independence. The law was reviewed to allow the central bank to finance the budget directly by buying state bonds. However, the government plans of asking the central bank to buy treasury bonds have risks to the economy, including more pressure on liquidity, high inflation, and a drop in the value of Tunisia’s currency.
South Africa: South African rand steady while investors await fed meeting
South Africa’s rand was steady on Monday amid subdued risk appetite, as investors awaits Federal Reserve’s policy meeting this week for fresh clues on its interest rate direction. The Rand traded at 18.8050 against the dollar, close to its previous close of 18.7975. The dollar was up about 0.16% at 103.72 against a basket of currencies, ahead of the Fed’s two-day policy meeting starting on Tuesday. South Africa’s benchmark 2030 government bond was marginally weaker, with the yield up 0.5 basis point to 9.765%.
Argentina: Argentina’s markets slumps after the dilution of Milei’s pivotal reform bill.
On Monday, Argentina’s bond, currency, and stock markets saw slight declines. This occurred after the government was mandated to remove a crucial fiscal section from its significant omnibus-bill intended to overhaul the nation’s struggling economy. Javier Milei, a libertarian leader in the South American nation, agreed to remove alterations to taxation and pensions from the extensive bill making its way through Congress. However, the government’s minority bloc is encountering strong opposition in this legislative process. This reforms makes passing the bill easier, but it also eradicates key reforms aimed at cutting spending and boosting state revenues to help meet a zero-deficit target this year as the government looks to trim high debts and bring down inflation that is running above 200%.
India: India likely to keep economic growth momentum in FY25 amid risks
India expects its economy to grow around 7% in the next fiscal year amid new geopolitical risks emerging from the Red Sea crisis that could affect global inflation and economic output. If supply chain disruptions in 2024 persist, it could impact trade flows, transportation costs, economic output and inflation worldwide. S&P Global Ratings expects India will remain the fastest-growing major economy for the next three years, putting it on track to become the world’s third-largest economy by 2030, overtaking Japan and Germany.