April 29, 2020/Coronation Report

Last we noted that the Central Bank of Nigeria (CBN) is in no hurry to raise market interest rates and that – most of the time – Nigeria’s commercial banks are liquid, usually reporting over N500.0bn (US$1.3bn) in total closing balances.

This situation is consistent with a pro-growth policy, and indeed all market interest rates (see side table) are below inflation. The problem is that the parallel market exchange rate (the bid rate for US dollars) slipped last week, reminding us of the situation in early 2017. We must assess where we are in terms of short and long-term FX cycles.

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