Oil Settles Up Amid Red Sea Tensions, Volatile Trading Session

Taiwo  Adekeye, FMVA

December 21, 2023

Oil prices settled slightly higher after a volatile trading session on Wednesday as investors worried about global trade disruption and tensions in the Middle East Following attacks on ships in the Red Sea by Yemen’s Houthi forces, who are aligned with Iran. Brent crude futures settled up 47 cents to close at $79.70 a barrel, while U.S. West Texas Intermediate crude settled up 28 cents closing at 74.22 a barrel.

Nigeria: Nigeria’s external debt drops by $1.57 billion hitting $41.59 billion in Q3’

Nigeria’s total external debt stock declined by $1.57 billion in the third quarter of 2023 from $43.16 billion to $41.59 billion as of September 30, 2023. decline is due to the redemption of Nigeria’s $500 million Eurobonds and the first principal payment of $413.859 million the IMF’s $3.4 billion loan obtained during the 2020 covid-19 period. Nigeria’s total public debt increased marginally from N87.38 trillion at the end of the second quarter to N87.91 trillion ($114.35 billion) as of September 30, 2023, representing 0.61% increase within three months.

Ghana: Economic growth declines to 2.0% in Q3’

The nation’s economic growth slowed to 2.0% YoY in Q3’ 2023 from 3.2% in the previous quarter, driven by a decline in the industrial sector.  The revised October inflation rate of 9.7% fell to 2.0% YoY in November, while Consumer inflation also slowed last month, to 26.4% from 35.2% in October. However, Ghana and its official creditors are currently negotiating a debt restructuring agreement. It intends to quickly come to an agreement to obtain the remaining $600 million from the IMF as part of a $3 billion rescue package.

South Africa: South African Rand firmer amid declining yield

The ZAR rallied against the USD in a light trade on Wednesday, the currency was drifting on global market factors in the absence of domestic economic data releases. The rand was up 0.4% from its previous close, trading at 18.2400 to the dollar. The yield on the government’s benchmark 2030 bond was 4 basis points lower at 9.69%, indicating a slightly higher price.

China: China maintains lending rate

China maintained benchmark lending rates at the monthly fixing on Wednesday, matching market expectations, following its central bank’s decision to maintain the stability of its medium-term policy rate earlier this week. The one-year loan prime rate (LPR) was kept at 3.45%, while the five-year LPR was unchanged at 4.20%. The central bank injected a net 800 billion yuan ($112.22 billion) of fresh funds into the banking system through medium-term lending facility (MLF) loans, booking the biggest monthly increase on record.

India: Indian firms’ dollar bond issuance hits 14-yr low as global yield surges.

Indian companies’ fundraising via dollar bonds hit a 14-year low in 2023, as increased global yields discouraged borrowers who moved to securing foreign currency loans. Corporates have raised $4.1 bln via six-dollar bond issues so far in 2023, marking the lowest since 2009, when annual fundraising totaled $1.6 bln. Multiple rate hikes by the U.S. Federal Reserve and anticipation of prolonged higher rates drove an increase in global bond yields. However, Indian companies leaned on foreign currency loans, which are benchmarked to floating interest rates.