Higher US Grain Output To Keep Prices Low

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Wednesday, June 17, 2020 / 10:30 AM / FDC / Header Image Credit: FDC


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Brent has lost 6.55% to $39.53pb after reaching a 3-month high of $42.30pb on June 5th. The prices are higher than the $26.63pb average in April but Nigeria still faces the problem of cutting back its oil production to comply with the OPEC quota. Analysts fear that a second wave of infections could lead to another global lockdown. This could slow oil demand and limit the gains from the oil supply cuts by OPEC+. 

As if this is not bad enough, the 20.4% contraction of the UK's economy is expected to adversely affect inward diaspora remittances and the thin forex supply. It is no surprise that commercial banks are now adopting a forex rationing strategy by discouraging customers from opening new confirmed letters of credit.

Despite the stability in the exchange rate (N455/$) at the parallel market, the resumption of international trade and travel is likely to increase demand pressures. This could cause the naira to weaken and trigger a spike in domestic inflation.

In the slides below, the FDC Think Tank discussed these and other burning issues on Channels TV Business Morning programme. 


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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