A boost from the recent elections
All Nigerian financial asset prices have recovered since the election victory of Muhammadu Buhari on 28 March. The markets are giving the winning APC the benefit of the doubt although we have to wait for the new ministers and policies until the end of May. In the short term, we see an improvement in security, some high-profile steps on governance and a few quick wins on the fiscal side. More substantial measures are expected in Q4 in the new budget.
Lasting oil price recovery still some way off
The new government is unlikely to be rescyed fiscally by the oil price. We see an en-year spot price for Bonny light by US$65/b and some softness ahead relative to current levels. The signals from the shale oil industry in the US are mixed.
Exchange-rate policy up in the air
The CBN has achieved stability bu squeezing liquidity and with its administrative measures. Demand for FX may have eased due to its increased cost. There are no signs that the CBN is ready to abandon its strategy of defending a level through selective intervention. The APC might favour a change in direction but would have to overcome the official mindset in favour of the status quo.
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