The analysts at FSDH Research have urged the federal government to tackle infrastructure problems and security challenges in Nigeria to sustain the current economic growth.
Daily Trust reports that in its monthly economic and financial market outlook report for April 2018, the analysts said that the prospect of Nigeria’s economic growth improved following an expansion in the Purchasing Managers’ Index (PMI) in March 2018 after recording two consecutive months of slowdown.
“The highest monthly foreign exchange inflows to Nigeria through the investors’ and exporters foreign exchange window was recorded in January 2018 at $6.04 billion while the inflows in March 2018 at $5.15 billion was higher than the highest amount recorded in 2017 at $4.53 billion,” they said
NAIJ.com gathered that FSDH Research expected the country’s inflation rate to decline further to 13.49 per cent in March, mainly on account of base effect of previous year.
They said that the declining inflation rate may lead to a further drop in the yields on fixed income securities, particularly at the short-end of the yield curve.
FSDH Research also noted that the current strategies of the Debt Management Office (DMO) to reduce the interest expense on the debt of the federal government is also working.
“The FGN has announced that it may raise less debt in the second quarter of 2018 than initially indicated. This development may reduce further the yields on the FGN securities.
"Although, FSDH Research believes the yields on the NTBs may drop further, we are of the view that the yields on the FGN Bond may move up gradually from the current level.
“FSDH Research expects a total inflow of about N1.85 trillion to hit the money market from the various maturing government securities and Federation Account Allocation Committee (FAAC) in the month of March.”
The FSDH Research said it expects the market to remain relatively liquid in April.
“This may necessitate the issuance of Open Market Operations (OMO) to mop-up the liquidity in the system.
“We expect the equity market to appreciate in Q2 2018 based on historical performance. Investors may take strategic positions in stocks that have good fundamentals to take advantage of the expected appreciation in the market,” they said.
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Meanwhile, NAIJ.com had previously reported that the managing director and chief executive of Financial Derivatives, Bismarck Rewane, said that he expects inflation to drop to 13.8% in March, down from 14.33% that was recorded for February.
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