Financial market update

31 October 2011, Sweetcrude, Lagos – International news
· EUR – Asian currencies rallied in October producitng the beset performance in 13 months after European leaders agreed on a plan to contain the debt crisis, bolstering demand for emerging market assets.

· GBP – The pound is turning into a Must Have Currency for investors seeking to get in on the worlds biggest government bond rally. After weakening in the first of of the year, the sterling has gained against all 16 major currencies expect the JPY

· JPY – The JPY dropped the most in three years against the dollar as Japan stepped into Foreign Exchange Markets to weaken the currency for the third time this year

· Speaking at a presidential roundtable on investing in Nigeria with top business leaders in Burwood, Australia yesterday, Finance Minister Dr. Ngozi Okonjo-Iweala gave insight into next year’s budget, saying its fiscal framework will be tight. Its financial outlay will focus on security and infrastructure development and other areas to get priority attention are power and the ports. The coordinating Minister of the economy reiterated the government’s plan to cut recurrent spending, which stands at 60% of the budget

· Bonds – Yields rallied on Friday again as the session was bullish. The 20yr yield continues to dip, trading over 100bps below the 2 & 3yr. The 20year appears very illiquid and in high demand and this distortion in the curve is likely to remain for some time yet.

· Bills – Another bullish session on Friday with a lot of demand feeding into the market today and some offsore interest also putting downward pressure on yields. Investors don’t wish to loose out on the current high yields and so this is playing out into the market.

· Money Market – OBB went up between 50-100bps to 14.50% while unsecured rates went up about 200bps to 17.00% as liquidity thins out on the back of funding for the WDAS and bill auctions. ”

NIBOR(%)                                            LIBOR (%)

O/N          16.2917                               USD 1 month       0.2458

7 Day        16.8333                              USD 2 month       0.3347

30 Day     17.2917                               USD 3 month        0.4294

60 Day     17.6667                               USD 6 month        0.6197

90 Day     17.9583                               USD 12 month      0.9337

Y/Y Consumer Inflation Sep 2011 :                             10.30%

FX Reserves: 27 October 2011                             USD33.02bn

MPR                                                                                    12.00%

Source: FMD and CBN


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