A Review of the Nigerian Energy Industry

Financial market update

9 November 2011, Sweetcrude, Lagos – International news

· JPY – The  Yen gained against majority of its most  traded peers as concern waned that the Bank of Japan will act to weaken the currency. It climbed to 77.58 per USD this morning.

· EUR – The Euro weakened versus the dollar dropping 0.3 percent to 1.3798 against the USD. The 17  member currency earlier strengthened as much as 0.20% to 1.3859 against the USD.

· CNY –  Inflation in China slowed by the most in three years giving officials more room to support growth as industrial production cools on the back of the European crisis. Consumer prices rose 5.5% in October from a year earliest. Industrial output growth slowed to 13.2%

· The Federal Government’s decision to concede on Tuesday, to the demand of state governments, to stop direct deductions for subsidy from the crude oil revenue, before crediting the Federation Account with the net revenue, could push it into struggling to meet its obligation on petroleum supply, as well as throw the nation into another bout of fuel scarcity. The agreement, which one petroleum industry stakeholder says has potentially ended petroleum subsidy, was reached after a marathon meeting that spanned several hours on Tuesday.[Businessday]

· Bonds – Another relatively quiet day last Friday and largely stable curve. Yields inched up about 15-20 bps across the curve as the expectation of OMO auctions to mop up the excess liquidity coming from FAAC will likely push up short end rates.

· Bills – Very patchy trading day on Friday, with the short end likely to spike on the back of the expected OMO auctions, the sell off seen in the last few days will likely continue as the market attempts to switch for higher yields.

. Money Market – OBB is stable at 14.00% while unsecured rates dipped to 16.00%. The FAAC funds have started filtering in causing rates to soften but the OMO auctions by the CBN will soak up all that liquidity and rates are likely to remain high.”

NIBOR(%)                                     LIBOR (%)

O/N                   16.66670             USD 1 month             0.24780

7 Day                 17.00000            USD 2 month             0.34230

30 Day              17.41670              USD 3 month             0.44420

60 Day              17.75000             USD 6 month             0.64170

90 Day              18.04170             USD 12 month            0.95860

Y/Y Consumer Inflation Sep 2011 :                                     10.30%

FX Reserves: 02 November 2011                            USD32.82bn

MPR                                                                                           12.00%

Source: FMD and CBN


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