They always say that investors should “make the trend your friend”. To policy makers, the advise is never to fight the markets because it is a losing game. Margaret Thatcher tried to save the British pound in a dog fight with George Soros but in the end Maggie lost the pound and her job in addition.
The same fate befell the Malaysian currency in the late 1990s, and now the same thing is happening to Liz Truss and Kwasi Kwateng. The British pound got slaughtered by speculators falling to an all-time low of $1.02 cents. The lesson here is that market recalcitrant policy makers will most certainly be punished by speculators.
Don’t look too far, Lebanon, Zimbabwe and Ghana are glaring examples that the market will always win. In Las Vegas, they say the House never loses.
The Naira at N735/$ – Victim or Villain
The Nigerian Naira has been battered, abused, misused and disused. But, it is still struggling to stay afloat like most frontier currencies. It has lost 8% of its value in one month before recovering to N735/$. We think that the CBN will now defend the Naira with its resources which are limited to keep it trading within the range of N710 – N740 in October. This is because the oil revenue from the newly fixed western pipeline will almost guarantee a minimum of an additional $700m per month from October.
Politics! Elections!! Politics!!! – Now over to the Marabouts
Elections are here again. It is 140 days to D-day. The picture is hazy and we believe that the constant variables that determine electoral victory i.e. tribe, religion and sectionalism are receding, whilst the dynamic variables are in the ascendancy, urbanization, younger demography and social media prowess over mainstream media. We believe that if the elections are held today there will be no clear winner in the first round. However, you will be left with 2 contenders and a kingmaker. Thereafter, it could be anybody’s game. But like they say one week is a long time in politics. Now over to the marabouts (witch doctors).
In this edition of the LBS Breakfast Session, Bismarck Rewane and the FDC Think Tank analyze the current developments in the markets, the economy and its impact on your business and strategy.
Kindly Download – The LBS Executive Breakfast Session – October 2022