Transactions across various electronic payment channels rose marginally by 0.38 per cent to N21.27 trillion in May 2021, up from the N21.19 trillion recorded in April 2021.  According to theManaging Director, Financial Derivatives Company Limited and a member of President Buhari’s Economic Advisory Council, Mr. Bismarck Rewane, gave the figure in a report titled: “Economic Policy: More Clarity and Less Ambivalence,” which he presented at the Lagos Business School’s executive breakfast session at the weekend.

The report showed that the value of transactions was flat due to the slow level of economic activities recorded last month.

It showed that while point of sales (PoS) transactions declined marginally to N503.96 billion in May, down from N507.86 billion the previous month; transactions via NIBSS Instant Payment climbed to N21.246 trillion, as against N21.191 trillion recorded the previous month.

According to the report, May was a month of mixed economic data as Nigeria’s first quarter (Q1) 2021 Gross Domestic Product grew 0.5 per cent (1.36% below Q1 2020).

It stated that the Q1 2021 data confirmed a slow growth and fragile economy, even as inflation showed a slight moderation to 18.12 per cent with food inflation down to 22.72 per cent.

Growth was not as broadly inclusive as policymakers expected, it stated.

It said the Central Bank of Nigeria (CBN) had adopted the NAFEX rate on its website, suggesting it is now the official rate. The development was an indication of a move towards convergence, it said.

“Forex transactions now strictly system-generated- not on mobile phones. This is a more transparent price discovery and settlement system,” it added.

The parallel market rate fell sharply to N501 to a dollar at the weekend.

This, the report attributed to panic buying, speculative trading, forex rationing, and front-loading of demand.

“Naira is approaching its fair value as multiple exchange rates converge. At N410.75/$ the currency is overvalued by 19.30 per cent. Convergence around the Investors and Exporters’ forex rate is expected to continue, to further reduce the parallel market premium.

“Parallel market rate will oscillate between N470/$ N490/$ in July and the CBN is to adopt a crawling peg strategy in the third quarter of 2021.

“The Naira-4-Dollar promo is going to have a muted impact on external reserves in the near term and the CBN will continue to clear its forex demand backlog to foreign portfolio investors,” it added.

Also, it predicted that gross external reserves would likely fall to $32 billion, adding that a higher oil price ($70pb) will buoy the naira and reserves.

Additionally, it anticipated that headline inflation might increase in May as insecurity continues to disrupt the commodities supply chain.

The report estimated that treasury bills and interbank interest rates would continue to rise in June, as the 364-day Treasury bill rates were fast approaching 12 per cent per annum.

Commenting on recent development in the cryptocurrency market, it stated that there were mixed views on the desirability of the digital trading instrument.

“Conservatives describe cryptocurrency as worthless and a movement from rat poison square to delusion. The less risk-averse investors think the time of cryptocurrency has come and Nigerian crypto investors are mainly speculators and looking to bypass exchange rate control regulations,” it added.

According to the report, the global value of the total cryptocurrency market is over $2 trillion, up from $260 billion a year ago. It estimated that the value of Bitcoin in Nigeria is $200 million, stating that the downside risk of cryptocurrency is high volatility

The market is currently driven by sentiment and momentum, it noted, adding that a tweet by Elon Musk sent a bearish signal, crashing the price of Bitcoin recently.

This, it stated, raised concerns about cryptocurrency as a store of value, adding that China, just like Nigeria, has banned its financial institutions from facilitating crypto exchange.

In Africa, it projected that inflation in the continent would average 8.1 per cent in 2021, noting that inflation increased in three countries and reduced in three others.

The 2021 GDP growth rate, according to the International Monetary Fund, is estimated at 2.5 per cent, with an average growth of 3.16 per cent expected over the next three quarters

“Real GDP growth – directionally positive but nominally insignificant. It is sub-optimal to have a significant impact on poverty and unemployment levels,” it added.


 Source: Thisday

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: