BY: Lukman Otunuga, FXTM Research Analyst comment on Nigeria Week Ahead
The economic calendar for Nigeria is relatively light this week with the only Tier 1 economic report scheduled for release on Tuesday.
All eyes will be on the latest inflation figure for June which is projected to rise 11.7% YoY. While signs of rising inflationary pressures will be an unwelcome development for the Nigerian economy, much attention will be directed towards the Central Bank of Nigeria (CBN) lending policy.
In an effort to stimulate economic growth the CBN has instructed banks to use at least 60% of their deposits for loans to the real sector by the end of September 30.
While this move has the potential to boost the economy as business investments increase and small and medium-sized enterprises (SME) receive support, it is too early to come to any conclusions.
Outside of Nigeria, the main themes influencing global sentiment will revolve around trade developments, Fed interest rate cut speculation, Brexit and anticipation around the upcoming G7 meeting.
There will be a lot of focus on the US retail sales data on Tuesday which influence expectations over how many times the Fed will cut rates in the second half of 2019.
A disappointing US retail sales print will most likely weaken the Dollar – ultimately supporting emerging market currencies including the Naira.