Financial market update

22 November 2011, Sweetcrude, Lagos – Local and international financial update

· USA – USD seems to find some stability after the rating companies affirmed the US credit grades leading to a reduction in excessive risk-averse sentiment. The US Congress budget super committee failed to reach agreement on reducing the budget deficit.

· INDIA – Indian rupee continues it fall reaching 52.54 per USD causing the central bank to say it is weighing the action to stem the decline. The Sensex has tumbled 21% and the Rupee 15% against the USD year to date.

· ASIA – The World Bank said China is heading for soft landing of growth in excess of 8% next year. Developing East Asia which excludes Japan, Hong Kong, Taiwan South Korea, Singapore and India will see its expansion moderate to 7.8% i2012 from 8.2% this year

· The CBN has said it will move more of the country’s foreign exchange reserves from euro to the Chinese renminbi. This, according to the apex bank, is due to the financial crisis that has affected most European economies. The bank also said it had reached the desired degree of stability for the naira and did not have any cause to be concerned over inflation due mostly to recent stability in its core components.

· Bonds – 7yr 10.70% FGN MAY2018 remains the toast of investors, another 15bps off on its yield to close at 15.42%, markets expected to rally at the short end of the curve where there is still relative value. Outcome of the MPC meeting remained stable from the previous meeting where all monetary policy tools used by the CBN i.e MPR, CRR, LR remained flat.

· Bills – Another round of light selling ahead of the MPC meeting yesterday. Yields came up an average of 15 – 30bps on all maturities, given the hold on MPR for the first time this year we look forward to a rally across board in the coming weeks.

· Money Market – OBB flat at 15.00% and O/N at 17.00%. Market remains illiquid.

· CBN: Offered and sold $250mio, total demand was $419.22mio, lowest intervention rate was at 156.7621 [inc. the 1% commission], 71 points depreciation against the previous auction.


                             Hi                   Low                   Close                 Prev.Close

USD/NGN       158.95/05     158.60/70       158.90/00       158.65/75

NIBOR (%)                             LIBOR (%)
O/N                 17.2500              USD 1 month           0.2567
7 Day               17.6667              USD 2 month           0.3728
30 Day            17.9583              USD 3 month           0.4950
60 Day            18.2083              USD 6 month          0.7061
90 Day            18.5000              USD 12 month        1.0259
Y/Y Consumer Inflation Oct 2011 :                              10.50%
FX Reserves: 15 November 2011                    (USD bn) 33.01
MPR                                                                                   12.00%
Source: FMD and CBN

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