Falling oil price fears weigh on Nigeria markets
The Naira, bonds and stock market are likely to see little relief in coming months due to falling oil prices. The naira has lost 4 percent since April, as offshore investors exit bonds, while its main stock index is struggling to rise much above its 21,000 point support level. The recent sell off has been spurred by fears world oil prices could fall below the $72 a barrel price on which the government has based its 2012 budget.
Oil, Nigeria’s main export commodity, has fallen to around $90, compared with its peak of almost $126 earlier in the year, on concerns about a weak global economy and crisis in Europe.
Traders say foreign investors are not panic-selling short term debt, but that when it comes up for maturity, they are taking their money back rather than reinvesting it. Treasury bill positions that were being rolled over are sold. Global markets are in generally cautious mood. The main reason for the exit of foreign funds is higher global risk aversion stemming from concerns over Europe’s debt crisis and a weak global economy.