A Review of the Nigerian Energy Industry

Financial market update

International News

· JPY: The yen slid 2.7 percent versus the dollar on Thursday as Japan intervened to curb yen strength to support its export-led economy; one day after the Swiss central bank unveiled a shock cut in interest rates to cap a soaring Swiss franc.

· CHF: The Swiss franc fell from record highs on Wednesday after the Swiss National Bank shocked the market with an interest rate cut, but the retreat should prove fleeting given mounting concerns about global growth.

· CNY: The yuan fell slightly against the dollar on Thursday morning even after the People’s Bank of China set an all-time high mid-point fixing, but traders expect yuan appreciation to still be on the cards despite some short-term correction.

Nigeria News
· Bonds – Volatile session with intraday swings across the curve as the profit takers and players with idle liquidity play out their intentions. No expected change in the short term with the volatility and swings expected over the next 2-3 weeks.

· Bills – Bearish session yesterday in the bill market, triggered by Monday’s OMO auction. This was further heightened following the news of a surprise OMO auction offer of N80bn for same day. Market activity is expected to be quite volatile over the next few weeks as the CBN tries to check the impact of the excess liquidity. We expect rates to rise over the next few weeks while system liquidity applies in the interim, significant downward pressure on rates.

· Money Market – Unsecured O/N rates are holding at 7.00% as the system continues to remain liquid with market up an average NGN400bn.

· Interbank/WDAS – $250m was offered and sold at yesterday’s WDAS auction with demand at $313.59. CBN intervened at $/NGN152.51.

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