• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Business Banking & Finance

Nigeria’s runaway inflation means low treasury bill yields will not last

4 years ago
in Banking & Finance, Economy, Features, highlights, Home, home-news, Opinions
2 min read
0 0
0
Godwin Emefiele, Governor of Central Bank of Nigeria, speaks at the Nigeria Capital Markets and Banking Forum.  Chris J Ratcliffe / Bloomberg

Godwin Emefiele, Governor of Central Bank of Nigeria, speaks at the Nigeria Capital Markets and Banking Forum. Chris J Ratcliffe / Bloomberg

50
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

Nigeria’s inflation is at its highest in three years, meaning that time is running out for low treasury bill yields, which have pushed money into the stock market.

The yield on the 91-day T-bill dropped below zero in November before a slight recovery into positive territory.

The Nigerian economy is being weakened by low oil prices and the impact of the Covid-19 pandemic.

Inflation at 15.75% in December has “gone beyond the tolerance level” for the central bank’s monetary policy committee (MPC), says Moses Ojo, chief economist at PanAfrican Capital Holdings in Lagos.

“Once the economy exits recession even narrowly, the MPC’s focus will shift to price stability.”

  • Higher interest rates will push T-bill yields up, starting at the end of the first quarter, he says.
  • Yields will increase by about 500 to 600 basis points by the end of 2021, predicts Ojo.
  • Banks and the currency – the naira – will benefit but not the wider stock market.
  • Banks will earn higher yields on T-bills, but the wider equity market will suffer because there will be funds switching from stocks to fixed income, says Ojo.
  • Higher yields tend to encourage foreign investment in T-bills, and “this will ease the pressure on the naira at least in the short term,” he adds.

Consumer price inflation in December was the highest level since late 2017. Food prices rose even faster, at 19.6%.

Upside inflation risks will persist into 2021, according to a note from Jacques Nel, head of Africa macro at NKC African Economics in Cape Town.

RelatedPosts

Parliament Adjourns Sine Die After Intense Legislative Session Marked by Reform Calls and Tributes

GACL Terminates Evatex Revenue Assurance Contract Amid OSP Probe

Cyber Security Authority Flags Rising Mobile Data Scam, Cautions Public

  • Naira weakness is likely to contribute to this by pushing up costs for foodstuffs and durable consumer goods, writes Nel.
  • The central bank’s persistent failure to meet its inflation goal has increased pressure on it to meet its latest – less ambitious – target of 11.95% by the end of 2021, he argues.
Liquidity

Yvonne Mhango, head of research for sub-Saharan Africa at Renaissance Capital in Johannesburg, expects that inflation will be stuck in the early to mid-teens in 2021. She argues in a research note that T-bill yields will stay low for as long as there is liquidity driving demand for the paper.

  • In January and February, more than N2trn ($7.9bn) of open market operations (OMOs) will mature, ensuring strong liquidity flows into T-bills, she writes. But OMO maturities will decline sharply from the end of March, she explains.
  • “We expect naira depreciation pressure to persist and accelerating inflation to compel the central bank to withdraw liquidity. Yields are likely to pick up on the back of this,” which will be positive for the banks, Mhango writes.

Globally, some interest rate cuts may be reversed this year. That will increase the pressure on Nigeria’s central bank to raise rates to be able to offer a premium, says Nkemdilim Nwadialor, equity research analyst at Chapel Denham Hill in Lagos.

  • Higher T-bill yields will improve the interest from investment earned by banks, says Nwadialor.
  • She expects the yield on one-year T-bills to rise to between 5% and 8% at the end of this year.
  • Even that will mean returns well below the rate of inflation, she notes. It will be a “long climb” before T-bills start producing positive inflation-adjusted returns, adds Nwadialor. “It’s not going to happen in the next 12 months.”
Bottom line

Equities are likely to suffer, as hitting the inflation target will be the central bank’s overriding priority this year.

Source: theafricareport
Via: norvanreports
Tags: COVID-19 pandemicinflationliquiditylow treasury bill yieldsMonetary Policy Committee (MPC)stock market
No Result
View All Result

Highlights

Gov’t Reopens Talks With PayPal to Restore Full Service Access in Ghana

Financial Sector Assets up 34.6% in 2024 to GHS 525.59 Billion

Banking Sector Soundness Remains Robust in 2024 Amid Strong Profitability, Adequate Capital Buffers

Sha’Carri Richardson Withdraws from US Trials Following Arrest

From Singuluma to El Kaabi: Can CHAN 2024 Unleash the Next Hat-trick Hero?

Ghana to Welcome King’s Baton Relay on August 8 Ahead of 2026 Commonwealth Games

Trending

Features

Parliament Adjourns Sine Die After Intense Legislative Session Marked by Reform Calls and Tributes

August 2, 2025

Parliament Adjourns Sine Die After Intense Legislative Session Marked by Reform Calls and Tributes Parliament has adjourned...

GACL Terminates Evatex Revenue Assurance Contract Amid OSP Probe

August 2, 2025

Cyber Security Authority Flags Rising Mobile Data Scam, Cautions Public

August 2, 2025

Gov’t Reopens Talks With PayPal to Restore Full Service Access in Ghana

August 2, 2025
Bank of Ghana

Financial Sector Assets up 34.6% in 2024 to GHS 525.59 Billion

August 2, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.