Foreign Exchange Down

31%

Two weeks before Nigeria’s election, a scarcity of cash and fuel is stoking chaos in the country. After clashes at empty ATMs and accusations of banks hoarding new Naira bills, the Supreme Court on Wednesday suspended the central bank’s second deadline to end the use of old bank notes. Meanwhile, Africa’s biggest oil exporting nation continues to struggle with severe petrol shortages, with retailers unwilling accept old Naira notes and to sell at o cial subsidized rates. Amidst concern that cash and fuel shortages will prevent the mobilisation and payment of o cials by the Electoral Commission of Nigeria, its Chairman Mahmood Yakubu said on Wednesday that polling will go ahead as scheduled on Feb. 25 and that the Commission is working with the national oil company and the central bank to assure supplies. Turnout to the polling stations could prove the deciding factor, with a Stears poll this week putting Labour’s Peter Obi as favourite in the event of high voter turnout and the ruling APC’s Bola Tinubu given a low turnout. For the currency markets, the lack of physical cash has held the Naira stable against the dollar this week, trading at 747 from 748 at last week’s close. We expect renewed Naira weakness once the new notes are fully circulating and business returns to normal.

Foreign Exchange

Down 16%

Cedi climbs as Ghana sweetens debt restructuring

The Cedi appreciated against the dollar, trading at 12.05 from 12.25 at last week’s close as FX demand eased. The Bank of Ghana sold only $9.2m of dollars in the spot market last week, compared to $40m at the previous Jan. 30 sale. Ghana is sweetening its debt swap o er to encourage participation of local pension funds, which would under the latest plan receive their full interest payments but over a longer time horizon. Other bondholders will receive lower interest payments as part of the debt swap. Ghana is also expected to convert around GHS40bn of loans it owes to the central bank into bonds as part of the broader restructuring plan to unlock a $3bn IMF bailout. As the country continues to advance with its restructuring e orts, we expect the Cedi to appreciate in the near term.