THE WEEK AHEAD: IMF and World Bank against CBN, who had a better argument
The Nigerian stock market closed higher during the week, with the benchmark ASI rising 2% to 48,459.65, reaching a level not seen in over 13 years. Similarly, at the macro level, Nigeria’s external reserve continued its upward trend during the review week after the sustained rise in the crude oil market, gradually approaching the $40 billion threshold.
On the other hand, demand pressure pulled the naira lower against the US dollar at the official Investors and Exporters (I&E) counter. The exchange rate depreciated by 0.2% to end the week at 418.33 naira per dollar.
These and many more happened during the week, therefore Nairametrics has compiled a list of notable events in the macro economy, stock market, regulators and crypto market that have made the one of the newspapers during the week.
Naira Falls in Official and P2P Market
- The naira depreciated by 0.2% over the week to close at 418.33 naira/$1 from 417.5 naira/$1 recorded at the end of the previous week. It reached N419.5/$1 during the week before stabilizing at N418.33.
- Meanwhile, there is an improvement in the volume of FX traded in the market, with over $600 million in FX value traded during the week compared to $581.41 million traded last week.
- Additionally, Naira broke above N591 at a dollar low during the week in the Peer-to-Peer market, before ending the week at N590, with further upside potential given the movement seen in the market. official during the week.
- The black market trended higher as the naira appreciated to close the week at N586/$1 due to reduced demand for currency in the market.
IMF predicts 3.4% economic growth for Nigeria
- The International Monetary Fund has upgraded Nigeria’s economic growth forecast for 2022 while expecting global output to fall due to the fallout from the crisis in Ukraine.
- The Washington-based lender cut expected global output in 2022 to 3.6% in April, from 4.4% expected in January. These projections are worrying since world production grew by 6.1% in 2021, a year driven by the effects of the pandemic.
- Nigeria, on the other hand, has revised its economic growth projections upwards. The International Monetary Fund (IMF) has projected the Nigerian economy to grow by 3.4% in 2022, compared to 2.7% initially forecast.
IMF warns Nigeria of a “dismal loop”
- The Washington-based lender, the International Monetary Fund, is worried about a potential “catastrophic loop” for Nigeria and other emerging economies.
- Nigeria’s bank credit to the government jumped to 14.9 trillion naira in February 2022, a slight increase from the 14.2 naira recorded in January 2022.
- The Bank added that “the sovereign-bank nexus could lead to a self-perpetuating negative feedback loop that could ultimately force the government into default.
- There is also a name for it: the “loop of destiny”. It happened in Russia in 1998 and in Argentina in 2001-02.
Emefiele explains the reason for the fixed exchange rate
- Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN) has revealed why the apex bank is unable to float the currency freely despite pressure from the World Bank and the International Monetary Fund (IMF).
- Emefiele, who pointed out that various countries have different problems and need to find solutions to address these problems, said the CBN will continue to brief the IMF and World Bank on Nigeria’s unique circumstances and how to manage them to advance the economy.
- Emefiele defended the apex bank’s managed float exchange rate system, pointing out that it was adopted to address the particular challenges facing the country.
- The CBN Governor said, “The IMF and the World Bank are our main development banks, and we have received their support at different times to solve some of our economic challenges, especially in financing.
- He added, “Nigeria’s situation is very unique and that is why we have continued to engage the IMF and World Bank to show our understanding of our local issues. And they do show understanding.
World Bank blames CBN FX policy rising food inflation
- The World Bank has warned that the Central Bank of Nigeria’s import restrictions and foreign exchange policies are the main drivers of food inflation in Nigeria.
- The Nigerian central bank has enacted regulations prohibiting specific commodities from using the Investors and Exporters (I&E) window to obtain foreign exchange at the official rate. Nonetheless, the Washington-based lender believes that policies to fix the exchange rate and impose trade restrictions have contributed to Nigeria’s worrying inflation.
- According to the World Bank, the CBN’s foreign exchange policy keeps the naira strong during the I&E window. However, the black market value of the Naria remains low.
NGX is trading at a price not seen in 13 years
- The Nigerian Exchange Group’s All Share Index is currently trading at 48,223.86 basis points. Interestingly, the Nigerian stock market has not traded this level since September 2008, over 13 years ago.
- The Nigerian stock exchange has witnessed significant growth, especially in 2020, where it recorded over 50% growth in ASI. In 2021, the stock market ended the year slightly up 5.89%, despite a strong pull for US-dominated stocks. However, its performance in 2021 is relatively weak, compared to parabolic performance in 2020.
- So far in 2022, ASI’s year-to-date (YtD) performance is up 12.89%, with the Nigerian market being one of the best performing emerging markets in Africa. Indeed, in terms of YtD performance, the NGX is doing better than its peers like the Ghana Exchange which is down 3.32% YtD, the Johannesburg Stock Exchange which is down 1.1% YtD and Nairobi Securities Exchange, which is also down 6.4% YtD.
UST Flips BUSD to Become Third Most Valuable Stablecoin
- UST, the native programmable stablecoin of the Terra blockchain, overthrew Binance Chain’s native stablecoin, BUSD, to become the third most valuable stablecoin with a market capitalization of around $17.5 billion.
- TerraUSD (UST) is known to be a decentralized and algorithmic stablecoin of the Terra blockchain. It claims to be a scalable, yield-bearing coin whose value is pegged to the US dollar. It was launched in September 2020 and its minting mechanism requires a user to burn a reserve asset such as LUNA to mint an equivalent amount of UST.
- According to statistics from CoinMarketCap, the total market capitalization of UST has gained approximately 14.5% in the last 30 days, from $15.31 billion to $17.5 billion at the time of writing.
Beanstalk Lost $182 Million Due to Exploit
- Beanstalk, a credit-focused stablecoin protocol built on the Ethereum blockchain, was exploited Sunday morning for all of its collateral following a security breach caused by two sinister governance proposals and a flash loan attack. This exploit saw the protocol lose an estimated $182 million in various cryptocurrencies according to blockchain security firm PeckShield.
- The problem began when the protocol was seeded with suspicious governance proposals, BIP-18 and BIP-19, issued on April 16 by the exploiter, who requested that the protocol donate funds to Ukraine. Ignoring the protocol, these proposals were accompanied by a malicious addendum that ultimately created the protocol fund sinkhole according to smart contract auditor BlockSec.
- The exploiter took out a $1 billion flash loan from the AAVE (AAVE) protocol denominated in DAI (DAI), USD Coin (USDC) and Tether (USDT) stablecoins. The attacker then used the funds to accumulate enough assets to take over 67% governance of the protocol and approve his own proposals.
- Flash loans must be executed and repaid in one block and typically involve multiple smart contracts at once. Flash loans have been used in the past to perform security hacks or exploits of other protocols.
Moonbirds records $292 million in transactions in just 4 days of launch
- A new Ethereum-based non-fungible token (NFT) project, Moonbirds, has risen to the top of the NFT trading volume charts after generating around $292 million in sales in just four days after launch.
- Moonbirds is an NFT bundle that consists of 10,000 computer-generated pixel owl avatar NFTs in total, all of which were quickly sold on April 16 for a mint price of 2.5 Ether (ETH) per NFT, or $7,625 at current prices.
- According to data from CryptoSlam, the project generated over $291.8 million in secondary sales (the figure also includes mint sales). The figure places the project as the best-selling NFT collection on seven-day metrics and third in the last 24 hours, as of this writing, according to DappRadar.
Netflix erases 4 years of gain, down 70% ATH
- Netflix’s stock price is having its worst day in about 18 years, with its price falling more than 38% over the week. Since hitting an all-time high (ATH) of $700.99 on November 17, 2021, just over 5 months ago, the stock price has been on a downward trend, causing it to loses more than 68.66%. The decline represents a reversal of 4 years of gains made since January 2018.
- As previously reported by Nairametrics, the reason for this parabolic decline in its share price is because the company announced that it lost around 200,000 subscribers in the first quarter of 2022. Netflix did not lose any subscribers in a quarter in over a decade.
- The company attributed the decline to stiffer competition, inability to expand in certain territories due to technology limitations and account sharing. He also blamed inflation and the war in Ukraine as part of the reason for losing his subscribers.