Financial market update

30 November 2011, Sweetcrude, Lagos – Local and international financisal market update.

· EUROPE – Euro area ministers approved enhancements to their bailout fund while backing off from setting a target for its firepower and seeking a greater role for the IMF in fighting the debt crisis. They agree to have more cooperation between the IMF and the EFSF to arrive at a solution to manage this crisis.

· INDIA – India’s economy grew last quarter at the slowest pace in more than two years after the nation’s central bank raised interest rates by a record to tame the fastest inflation among BRIC nations. GDP rose 6.9% in the 3 months through Sep 2011. Which is the weakest expansion since the second quarter of 2009.

· CHINA – Strategists predict the yuan will be the worst performer of currencies in the biggest emerging markets over the next four months as sluggish exports curb appreciation limiting appetite for Dim Sum bonds. The Yuan has appreciated 3.5% this year. The second biggest advance among 25 emerging-market currencies tracked by Bloomberg and the US is pressing for faster gains saying an “undervalued currency gives Chinese exporters and unfair advantage.

· The FG and 36 states of the federation on Monday resolved their differences over mounting fuel subsidy deductions as they approved the sharing of N615.75bn among the three tiers of government. Similarly, the FG bowed to pressures from the state governors as it released $2bn (N310bn) for the completion of abandoned projects across the federation.

· Bonds – Patchy day on Tuesday with yields attempting to adjust upwards without great success. Yields remained relatively flat across the curve, only inching up slightly.

· Bills – The market was relatively quiet, the longer end of the maturities were sold some more on Tuesday seeing rates up about 50bps on the long end. With the huge volume of funds expected in from the monthly statutory allocations we can be certain that the CBN will offer OMO bills which would push up rates across the bill maturities.

· Money Market – OBB averaged 14% while unsecured rates traded an average 17.00% as liquidity remains quite thin. The monthly statutory allocation has been approved and we will expect the flows into the system before the end of the week so liquidity should ease a little. ”


Hi        Low        Close        Prev.Close

USD/NGN      161.35/45   160.10/20     161.05/15     160.05/15


NIBOR (%)                             LIBOR (%)
O/N                     17.1667       USD 1 month       0.2702
7 Day                   17.4167       USD 2 month       0.3869
30 Day                17.7083       USD 3 month      0.5269
60 Day                17.9583       USD 6 month      0.7458
90 Day                18.2500      USD 12 month     1.0660
Y/Y Consumer Inflation Oct 2011 :                      10.50%
FX Reserves: 22 November 2011           (USD bn) 33.06
MPR                                                                            12.00%
Source: FMD and CBN


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