Jan 30 (Lagos) - The Nigerian Naira was steady against a broadly weaker Dollar despite US-China trade tensions and global growth fears weighing on risk sentiment.
With no key economic reports expected from Nigeria today, the Naira is likely to remain driven by geopolitical risk factors, the Dollar’s performance and global sentiment. However, the Naira’s medium- to long-term outlook hangs on the upcoming presidential elections and oil prices.
If increased government and election-related spending ends up stimulating inflationary pressures, this is seen impacting the Naira exchange. The local currency is likely to be pressured further by falling oil prices, especially when considering how WTI Crude is struggling to keep above $52.
It remains unclear how the second parliamentary vote will play out, especially when considering how ‘Plan B’ shares many similarities with ‘Plan A’ which was previously rejected by British MP’s. Although the pending vote is not legally binding, it should provide fresh insight into what the House of Commons desires regarding Brexit. While there are more than a dozen amendments suggested, Sterling is seen appreciating if the speaker chooses the Cooper and Brady amendments.
Although expectations continue to mount over the government extending Article 50, it is worth noting that the unanimous agreement of all the remaining 27 EU countries will be needed for this to materialize. The truth of the matter remains that one must always expect the unexpected when dealing with Brexit, and the parliamentary Brexit vote this evening should be no exception.
Source - Lukman Otunuga FXTM.