Market Commentary
Oil prices rose on Friday, on track to notch their first weekly rise in two months after benefiting from a bullish forecast from the International Energy Agency (IEA) on oil demand for next year and a weaker dollar. Brent futures rose 21 cents to $76.82 a barrel at 0640 GMT. U.S. West Texas Intermediate (WTI) crude climbed 20 cents to $71.78.
KENYA: Nairobi Securities Exchange Eyes Recovery as US Federal Reserve Signals Rate Cuts
The Nairobi Securities Exchange (NSE) anticipates a turnaround following the US Federal Reserve’s announcement of expected interest rate cuts in 2024. The NSE, grappling with capital flight due to higher US rates, may see relief as the shilling, alongside global currencies, aims for potential gains against the dollar. The Fed’s projection of three rate cuts next year could reverse capital outflows from emerging markets, making smaller market assets more appealing. Despite recent challenges, market analysts suggest a positive outlook for risk sentiment as the Fed shifts towards easing, potentially easing the NSE’s woes.
NIGERIA: Naira Devalues to N1,260 per Dollar in Parallel Market
The Nigerian naira experienced depreciation, reaching N1,260 per dollar in the parallel market and N904.65 per dollar in the official Nigerian Foreign Exchange Market (NAFEM). Data from FMDQ indicates a N39.62 depreciation in the official market, causing the gap between official and parallel rates to widen to N355.35 per dollar. NAFEM saw a 22% increase in traded dollars, reaching $120.89 million. The shifts suggest ongoing challenges in maintaining currency stability and highlight the widening disparity between official and parallel market exchange rates.
GHANA: Ghana’s Inflation Drops to 26.4% in November 2023, Led by Food Price Decline
Ghana’s inflation decreased to 26.4% in November 2023, down from October’s 35.2%, with food inflation playing a significant role. Food inflation fell by 12.6% to 32.2%, with a monthly change of 0.8%. Non-food inflation also eased to 21.7%. Locally produced items had an inflation rate of 26.1%, while imported items stood at 27.1%. Five divisions, including Alcoholic Beverages and Tobacco, recorded rates higher than the national average. Additionally, eight out of 15 food sub-classes registered inflation above the overall food inflation of 32.2%.
ETHIOPIA: Ethiopia Seeks Urgent Restructuring of $1 Billion Eurobond as Default Risk Looms
Ethiopia’s government is racing against time to renegotiate its international bond, proposing a “loss reinstatement” provision for investors in a bid to salvage a deal. The move follows the failure to reach an agreement with core bondholders, jeopardizing a $33 million coupon payment due on Dec. 11. The provision compensates bondholders in case of another default post-restructuring. With an ailing economy and growing debt, Ethiopia underscores the importance of satisfying official creditors and emphasizes the delicate balance in managing debt obligations amid challenging circumstances. Fitch downgrades Ethiopia to “C,” with further downgrade looming if the coupon payment is missed.
EGYPT: Egyptian Exchange Sees Fluctuations in Profit-Taking on Leading Stocks
The Egyptian Exchange (EGX) experienced fluctuations in its indices during the week ending on December 14, with profit-taking affecting leading stocks. The EGX30 closed the week 0.15% higher, while the EGX70 and EGX100 increased by 1.49% and 1.13%, respectively. The market cap rose by 0.61%, reaching EGP 1,673 billion, while the trading value decreased to EGP 193.1 billion. Financial analyst Mahmoud Atta attributed the fluctuations to year-end profit-taking, anticipating continued variation in performance and suggesting EGX30 to hover between 24,200 and 25,000 points until January. He also predicted positive performance for EGX70, approaching the 5,500-point level.