This economic report provides an in-depth analysis of global and Nigerian economic trends for March 2025. Key highlights include monetary policy decisions from major central banks, Nigeria’s inflation trajectory, foreign exchange market dynamics, money market performance, and movements in the equities and fixed-income segments. The report also covers the impact of global oil price fluctuations and investor sentiment. Readers will gain insights into how these economic indicators shape Nigeria’s financial landscape and investment opportunities.
In this week’s global economic report, the U.S. Federal Reserve maintained its benchmark interest rate at 4.25%-4.50% during its March 2025 policy meeting, reducing the pace of quantitative tightening. This decision was influenced by trade uncertainties, labor market softening, and persistent inflation.
The Bank of England’s Monetary Policy Committee voted 8-1 to maintain the benchmark interest rate at 4.50%, marking a cautious pause in its rate cycle amid inflationary pressures and global uncertainties. The decision was reinforced by geopolitical risks, trade uncertainties, and rising inflation expectations among businesses and households.
The BoE is expected to maintain a cautious approach, balancing inflationary pressures against the UK’s sluggish economic growth.
Nigerian Economy
Nigeria’s headline inflation eased for the second consecutive month in February 2025, reaching 23.18%, primarily due to a slowdown in food inflation, which offset the uptick in core inflation. The moderation in food inflation was driven by lower prices of key staples, improved supply volumes, a stable currency exchange rate, and lower energy costs.
However, core inflation increased due to rising costs in transportation, restaurant & accommodation services, and communication, impacted by a 50% hike in telecommunication tariffs.
Inflationary trends varied across different states, with Edo recording the highest year-on-year (YoY) inflation rate at 33.59%, followed by Enugu at 30.72% and Sokoto at 30.19%. State-level food price trends also exhibited significant disparities, with Sokoto leading with the highest YoY food inflation at 38.34%.
Inflationary pressures are expected to moderate further, aided by sustained foreign exchange (FX) stability and stable energy costs. However, seasonal demand pressures from the upcoming Eid-El-Fitr celebrations, the proposed hike in electricity tariffs, and increased demand from manufacturers could pose upside risks to the inflation outlook.
Oando Clean Energy, in partnership with the Rural Electrification Agency, has signed a Memorandum of Understanding to develop a 1.2-gigawatt solar power project—a significant milestone in Nigeria’s renewable energy sector. The first phase, a 600MW rollout, is scheduled for completion in 2026.
Foreign Exchange Market Update
Oil prices rose for the second consecutive week due to U.S. sanctions on Iran and OPEC+ plans to cut output. Nigeria’s benchmark Bonny Light crude oil surged by 43.41% to $74.04 per barrel. However, Nigeria’s external reserves declined by 4.11% to $38.36 billion.
The Central Bank of Nigeria (CBN) is utilizing some of the savings to defend the local currency amid minimal foreign exchange inflows.
The Naira struggled in the official market, weakening by 1.23% to ₦1,536.89 per dollar. Conversely, in the parallel market, the local currency gained ₦12 against the dollar, appreciating by 0.77% to an average of ₦1,568 per dollar.
Money Market Update
The Nigerian money market closed mixed due to deteriorating financial system liquidity beyond ₦1.7 trillion. Overnight NIBOR rose by 0.07 percentage points to 32.90%, while 1-month, 3-month, and 6-month NIBOR rates declined as banks renegotiated funding obligations. The Nigerian Interbank Treasury Bills True Yield (NITTY) trended upwards as investors sought higher returns on investments.
Market sentiment remained strong, with robust demand and high subscription levels at the Nigerian Treasury Bills (NTB) auction. However, the secondary market for T-bills closed in bearish territory, with selling pressure pushing the average market yield up by 21 basis points to 19.38%.
In the fixed-income segment, the Nigerian bond market experienced a bearish trend this week due to domestic and global factors. Investors offloaded their holdings, leading to a repricing of the instruments. In the secondary bond market, bondholders adjusted their positions due to declining inflation and expectations of a potential rate cut by the CBN.
The Eurobond market saw sell-offs due to the U.S. Federal Reserve meetings, geopolitical tensions, and new tariffs. This led to an upward movement in yields for JAN-31, FEB-30, and NOV-27 instruments.
Equities Market Update
The Nigerian equities market experienced a persistent downward trend this week, with increasing volatility exerting pressure on stock prices. The benchmark index fell by 0.94%, closing at 104,962.96 points, driven by investors reacting to evolving global economic conditions.
Despite the release of the February 2025 Consumer Price Index (CPI) report indicating easing inflation, positive macroeconomic developments failed to offset the prevailing bearish sentiment, leading to an extended sell-off across various market sectors.
The total market capitalization of listed equities declined by 0.80% week-on-week to close at ₦65.82 trillion, resulting in a significant loss of ₦532.17 billion. The year-to-date return on the All-Share Index weakened further, moderating to 1.98%.
Trading activity remained subdued, with 32 stocks recording gains while 47 stocks declined in value. The total number of deals executed on the Nigerian Exchange Limited (NGX) also fell, with the volume and value of traded stocks declining.
Other Assets
Crude oil prices rose by 1.03% to $71.75 per barrel this week, driven by supply-side constraints and improved demand outlooks, particularly from China and the United States. Fresh U.S. sanctions on Iranian crude exports further tightened supply.
Bitcoin had a mixed performance this week, with investors trading cautiously ahead of the Federal Open Market Committee (FOMC) meeting. The Fed’s announcement of maintaining its key interest rate and hinting at potential rate cuts later this year boosted market sentiment, though the rally was short-lived due to profit-taking activities.
Conclusions
Inflation remains a pressing global issue, leading central banks to adopt hawkish stances. In Nigeria, however, inflation shows a downward trend across all indexes, thanks to a stable currency, potential market interventions, and seasonal effects. The forecast suggests Nigeria’s headline inflation will continue to decline, with a slight increase expected to 23.40% in March 2025 due to seasonal purchases and festivities.
The outlook for the Naira is mixed, as demand for foreign currency rises amid ongoing speculation. The CBN is expected to maintain weekly currency interventions. Investor sentiment remains positive, with a gradual easing in average market yields.
Furthermore, the Debt Management Office plans to auction FGN Bonds, with lower amounts compared to previous auctions, likely resulting in increased demand and higher rates. The equity market is currently oversold, presenting buying opportunities, especially for dividend-paying stocks. As the first quarter of 2025 wraps up, investors may adjust portfolios to capitalize on dividend season, while market direction will be influenced by global trends and Nigeria’s economic outlook.
Like 👍, Comment, share this article, and Follow us on our social media handles.
WhatsApp Channel
Telegram Channel
