Taiwo Adekeye, FMVA
January 25, 2024
Oil prices rises by about 1% on Wednesday due to a large U.S. crude storage withdrawal, a slip in U.S. crude output, Chinese economic stimulus, geopolitical tensions and a weaker dollar. Brent crude futures was up by 0.6% settling at $80.04 a barrel, while U.S. West Texas Intermediate crude (WTI) rose by 1.0% to close at $75.09.
Nigeria: CBN projects 21% inflation, aims to support the Naira
The west African nation’s central bank forecasts inflation to slump to about 21% and will assiduously work to revive its undervalued currency. Inflation rate in December hit 28.92%, its highest level in more than 27 years. However, Inflationary pressures are expected to reduce in 2024 due to the CBN’s inflation-targeting policy, which aims to alleviate inflation to 21.4%. Improved agricultural output and the easing of global supply chain pressures would boost consumer confidence and purchasing power.
South Africa: Inflation figures slip for the second month in December
South Africa’s consumer inflation fell for the second month in a row in December, to 5.1%YoY from 5.5% in November. The average inflation rate for 2023 was 6.0%, lower than 6.9% in 2022, while Core inflation which excludes food and fuel prices was unchanged in December at 4.5% in annual terms. while Inflation is expected to average 5% in 2024 and the South African Reserve Bank will announce a monetary policy decision on today.
Mexico: Mexican headline inflation continued to accelerate in early January
Mexican headline inflation persisted in its upward trend for the fifth half-month in a row. Annual headline inflation in Latin America’s second-largest economy hit 4.90% the first 15 days of January, up from the 4.66% in December and above the forecasts of 4.78%. The jump in Mexico’s inflation to a higher-than-expected 4.9% was entirely due to a particularly sharp rise in agricultural goods inflation.
India: India bank liquidity deficit hits record high
The Asian nation banking system liquidity deficit hit a record high, amid outflows towards tax payments and limited government spending, with traders anticipating that the central bank will inject more cash to address the shortfall. The deficit widened to 3.34 trillion rupees ($40.18 billion) as of Jan. 23, nearly tripling from the start of the month. The widening in deficit is a combination of rise in tax collections and a slowdown in government spending, which has been seen in the last few months
China: China cuts bank reserves deeply, stock indexes and yuan surges simultaneously
China’s central bank announced a deep cut to bank reserves on Wednesday, a move that will inject about $140 billion of cash into the banking system and communicate a strong signal of support for a fragile economy and plunging stock markets. This decision led to a bounce in benchmark stock indexes, and the yuan. The People’s Bank of China (PBOC) said it was making a 50-basis points (bps) cut, the biggest in two years, as regards the amount of cash banks must hold as reserves, effective from Feb. 5.