Global News: US inflation ticks back up
FGN to begin sale of domestic FX-denominated bonds in Q2 2024
Wednesday’s “disappointing” inflation data in the United States showed a jump from February, dampening expectations of an interest rate cut and raising concerns that inflation could remain stubbornly high.
Our thoughts
The markets didn't appreciate this increase in inflation from 3.2% to 3.5% so they sold. Why? Because inflation moving further away from the feds 2% target indicates that the much awaited (and needed) rate cuts ain't happening soon.
If you don't know why rate cuts are needed, we unpacked it out our last webinar in the money wit club😂✌️.
FYI , the whole world needs that rate cut.✌️
African News: Zimbabwean new currency begins trading
Zimbabwe's gold-backed currency started trading on Monday following the announcement of the new currency by the central bank last Friday.
The Zimbabwe Stock Exchange (ZSE) announced that effective from April 8, the trading currency is the Zimbabwe Gold, or ZiG.
Our thoughts
This is quite interesting! The Zim economy has been through a whole lot! Interest rates hit a high of a whooping 130% !
Currency devalued from 6000 Zim Dollars to 29,000 Zim Dollars to the dollar. With this devaluation, of course inflation is at 55%.
But what are they trying to achieve with this new currency?
Stability!
Regular paper money is backed by trust and its value is simply what we decide it is. This 'new' move is a throwback in the history of money, were all the currency in circulation was backed by Gold. Going by history, linking this new currency to the value foreign currencies , gold and precious metals should help tame devaluation and subsequently inflation. Fingers crossed
Nigerian News: Nigeria's oil production drops to 1.23million
Nigeria’s crude oil production witnessed the second consecutive monthly decline since the beginning of this year, as it dropped to 1.231 million barrels per day in March, the Organisation of Petroleum Exporting Countries stated on Thursday.OPEC disclosed this in its latest Monthly Oil Market Report for April 2024, stating that crude oil production details which it got through direct communication from Nigeria showed that the country pumped less oil in March when compared to what was produced in February
Our thoughts
The Nigerian 2024 budget assumes oil sales of 1.78million barrels daily at $78 per barrel and exchange rate of N750/1$
In summary, Nigeria should be earning about N104billion daily (1.78 X 78 X 750), at an out put of 1.23mbp , oil prices at $90/ barrel and exchange rate of $/1200, daily earnings stands at about N132 billion daily.
Points to note:
The budget is at $78, in an ideal situation, the excess return on oil prices (ie $90-$78=$12) should go to excess crude account. Should!
Whilst we can say that the revenue to be shared is higher than budget (great for the states) this shortfall in production has a direct impact on our reserves- the nominal amount of USD we should be receiving from sales is reduced.
One of the reasons (amongst many) for the devaluation of the currency
Watch this BBC Africa session on the economy featuring Oler
Whats happening at the Money Wit Club
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