Month: April 2023

The US dollar suffered a sharp decline on Wednesday following the release of data that revealed consumer prices in the United States rose less than anticipated in March.

The unexpected result has prompted experts to speculate that the Federal Reserve may halt its rate-hiking efforts, possibly after a rate increase in May.

The implications of this latest development are significant, as the Fed’s monetary policy decisions can have a major impact on the global economy.

Last month’s Consumer Price Index (CPI) only saw a 0.1% climb, falling short of economists’ forecasted 0.2% gain and marking a decrease from the 0.4% rise observed in February. Over the 12 months leading up to March, the CPI increased by 5.0%, which represents the smallest year-on-year gain since May 2021. By comparison, the CPI had risen by 6.0% on a year-on-year basis in February.

Excluding the volatile food and energy components, the CPI increased 0.4% last month after rising 0.5% in February. Sticky rents continued to drive core CPI.

“Headline inflation coming down more than expected is backing the view of the Fed being basically one more and done,” Reuters quoted Joe Manimbo, senior market analyst at Convera in Washington, D.C. in a report

The dollar index was last at 101.68, down 0.41% on the day and below the level of around 102.11 before the data. The euro reached $1.09900, the highest since Feb. 2, and was last at $1.0967, up 0.48% on the day. The dollar dipped to 133.04 Japanese yen , from around 133.85 before the data.

According to fed funds futures traders, there is a 69% chance that the Fed will increase rates by 25 basis points at its meeting on May 2-3. This probability has decreased from approximately 76% prior to the latest data.

Retail sales data on Friday will be analyzed next for how consumer spending is being affected by higher prices.

Nigeria has received $800 million from the World Bank to expand its national social program as it prepares to phase out costly petrol subsidies in June.

Africa’s largest economy has allocated 3.36 trillion nairas ($7.3 billion) for petrol subsidies, which will be in effect until mid-2023. However, there are no provisions for the expense beyond that time, despite it costing more than healthcare and education combined.

The government is considering cash transfers and mass transit buses for workers to reduce the impact of subsidy removal on the most vulnerable members of society.

According to the Finance Minister, the government has identified ten million households, equivalent to 50 million people, as part of its vulnerable list, and there are still several plans in the works.

The COVID-19 crisis was predicted by the World Bank in 2021 to result in over 11 million Nigerians falling below the poverty line by 2022, bringing the total number of impoverished individuals in the country to over 100 million. This figure represents more than half of the estimated 200 million population.

Currently, there are discussions among various levels of government regarding the removal of fuel subsidies. The incoming administration of President-elect Bola Tinubu is also involved in these talks.

Recently, Labour Minister Chris Ngige suggested that after the removal of the fuel subsidy in June, public sector workers should receive pay increases under Tinubu’s new administration, which begins in May following Buhari’s departure.

Although the Nigerian government receives billions of dollars annually from oil exports, many citizens view cheap subsidised fuel as one of the few benefits they receive from the state. This is due to the government’s failure to provide essential services such as electricity and security.