Oil Prices Slip Further As N’York Feds Comment Rumbles Market

Taiwo  Adekeye, FMVA

December 18, 2023

Brent and U.S. crude futures closed at a small loss following a see-saw session, in which prices slumped more than $1 a barrel at one point on Friday. However, traders were also shaken by comments from New York Federal Reserve Bank President John Williams on Friday about hopes for interest rate cuts in the coming year. Brent futures declined by 6 cents closing at $76.55 a barrel. U.S. West Texas Intermediate (WTI) crude slumped by 15 cents, to close at $71.43.

Nigeria: November inflation surges to 18-yr high due to increasing food prices.

Inflation increased in November for the eleventh consecutive month to the highest level in 18 years. The rise is as a result of worsening cost of living which also prompted the CBN to address the rise. Consumer inflation surges to 28.20% in November from 27.33% in October. Food inflation, which accounts for the bulk of Nigeria’s inflation basket, increase to 32.84% in November from 31.52% a month earlier. The central bank plans to tighten policy over the next two quarters to manage inflation, after restarting its Open Market Operations (OMO) to assist in controlling money supply

Uganda: Ugandan shilling remains stable despite low supply and demand.

The UGX was stable amid low demand and supply. The UGX was stable on Friday amid subdued activity on both supply and demand sides. commercial banks quoted the shilling at 3,770/3,780 against the USD, unchanged from Thursday’s close.

Kenya: shilling declines due to importer demand for USD

The increased demand for hard currency from importers of goods and oil led to a decline in the value of the Kenyan shilling on Friday.  The shilling was quoted at 153.50/70 by commercial banks, down from 153.40/60 Thursday’s close.

India: Rupee barely changed even as dollar extends decline

The Indian rupee was little changed on Friday due to continued pressure from domestic dollar demand, despite the dollar index hovering near its weakest level in four months. Strength in the euro and GBP drove down the dollar after the Bank of England and European Central Bank pushed back on expectations of rate cuts in 2024. The rupee was at 83.3025, a little changed from its close of 83.33 in the previous session.

Brazil: Fitch maintains Brazil’s rating describes Lula’s administration as pragmatic.

The first year of President Luiz Inacio Lula da Silva’s third term in office “has shown broad policy pragmatism,” according to Fitch Ratings, which maintained Brazil’s long-term foreign-currency issuer rating at “BB” with a stable outlook on Friday. The nation’s broad and diversified economy, high per capita income, deep domestic markets, and sizeable cash reserve all contributed to its current ratings. However, earlier this year, S&P raised Brazil’s outlook rating to positive from stable, affirming its BB-minus rating.

China: China plans to issue special debt and run a 3% GDP budget deficit in 2024.

The Chinese government decided last week at its annual economic summit to run a 3% GDP budget deficit in 2024, while off-budget debt may be used to fund additional fiscal support. While the deficit figure is lower than this year’s revised 3.8% target, suggesting Beijing appears to be planning to maintain fiscal restraint and is not planning to take major fiscal measures next year. In October, China unveiled a plan to issue 1 trillion yuan in sovereign bonds by year-end to enhance flood-prevention infrastructure. They were included in the budget, raising the 2023 deficit target to 3.8% of GDP from the original 3%.

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