Oil Surges Over 1% After U.S. Data Impacts US$

Taiwo Adekeye, FMVA

February 16, 2024

Oil prices climbed by over 1% on Thursday after U.S. retail data drove a sell-off in the dollar. The U.S. dollar index slide about 0.3% after data showed U.S. retail sales fell more than expected in January. However, a weaker dollar usually ramps oil prices as it makes the commodity cheaper for holders of other currencies. Brent crude futures settled up by 1.5% closing at $82.86 a barrel while U.S. West Texas Intermediate crude futures rose climbed by 1.8% to close at $78.03.

Kenya: The Kenyan shilling retreats from its gains after its Apex bank buys dollars

Kenya’s shilling loses some of its gains on Thursday, after the central bank bought dollars to alleviate volatility as the currency surged to its strongest level since June 2023. Commercial banks quoted the shilling at 145.00/146.00 to the U.S. dollar, up more than 3% on Wednesday’s closing rate of 150.00/151.00. while on Thursday the shilling was up by almost 8%, bid as strong as 139.00 to the U.S. dollar, in a rally fueled by foreign inflows into Kenyan domestic debt and the resolution of a $2 billion Eurobond maturing in June. Additionally, Kenya sold a new $1.5 billion Eurobond maturing in 2031 which it will use to buy back via a tender offer a large chunk of the $2 billion bond due in June.

Nigeria: Inflation hits 29.90%, driven by soaring food costs

Nigeria’s inflation rate accelerated further in January and reached almost 30% in annual terms, this double digit figure is sponsored by soaring food costs and the fall of the naira to record lows. Consumer inflation was up for the 13th straight month in January to 29.90% year on year from December’s 28.92%.  Inflation in Africa’s biggest economy and most populous nation has not climbed so high since mid-1996, eroding incomes and savings, while the Naira has suffered a second devaluation in less than a year last month, which is a major key factor behind price pressures alongside energy and logistics costs associated with infrastructure problems.

South Africa: The Rand gains strength against weaker USD

The South African Rand Climbed on Thursday as the dollar slumped after a mixed batch of U.S. economic data. The USD was down about 0.25% against a basket of global currencies, after new data including U.S. retail sales and jobless confirms that the Federal Reserve are on track to start cutting interest rates mid-year.  The rand traded at 18.9800 against the USD, about 0.4% stronger than its initial close. South Africa’s benchmark 2030 government bond was stronger, with the yield down by 12 basis points to 10.045%.

Brazil: Global grain traders are concerned about the bankruptcy filings by farmers in Brazil.

The Brazilian grain exporters association, Anec, expressed concern over the increasing number of farmer bankruptcy filings in the country. The recent uptick in farmer bankruptcy cases may affect the effective delivery of committed grains throughout the season, may also hinder traders’ ability to complete their export programs. Brazil is the world’s largest soybean producer and exporter, and a major corn provider to Asia, Europe and the Middle East. Additionally, Brazil’s total grain production will drop to an estimated 299.7 million metric tons this season, from 319.8 million tons in the preceding one.

India: Rupee gains marginally, driven by slip in US bond yields.

The Indian rupee gains slightly on Thursday, supported by a fall in U.S. Treasury yields which pulled back slightly after surging higher in the midst of hotter than expected U.S. inflation data. The 10-year U.S. Treasury yield was slightly lower at 4.23% after falling by 5 basis points on Wednesday in light of remarks from a Federal Reserve official about the timing of possible interest rate cuts. However, the Rupee was at 83 against the U.S. dollar as of, against its close at 83.03 in the previous session.