Financial market update

5 December 2011, Sweetcrude, Lagos – Local and international financial market update.

· US – Job gains in the US picked up in the month of November and the unemployment rate unexpectedly fell to the lowest level since March 2009. A decline possibly augmented by the departure of Americans from the labor force. Payroll climbed 120,000 with more than half the hiring coming from retailers and temporary help agencies.

· INDIA – India’s service industry expanded in November at the quickest pace in three months stoking inflationary pressures in Asia’s third largest economy. The Purchasing Manger’s Index rose to 53.2 from 49.1 in October. A reading above 50 indicates expansion. The currency has slumped 13% against the USD this year, making it Asia’s worst performer. The Sensex has lost about a fifth of its value in 2011

· CHINA – The Vice Foreign Minsters says that China cant use its USD3.2 trillion in FX reserves to rescue European nations. China learned from the 1997 Asian Financial Crisis that it needs to keep large reserves to maintain liquidity in order to honor obligations.

· Ecobank Transnational Incorporated on Thursday said it had obtained a $285m loan from South Africa’s Nedbank to support ETI’s acquisition of Oceanic Bank International Plc to consolidate its footprint on the continent. It added that Nedbank would be able to convert the loan into 20 per cent equity in Ecobank in 24 to 36 months, which would deepen the strategic relationship between the two banks.

· Bonds – A relatively quiet session to close the week last Friday, Yields retraced somewhat with the 2013s and 2014s the focus of most of the days activity. We expect a lot of volatility this month in the lead up to year end as the liquidity and balance sheet management conflicts play out.

· Bills – Still bearish in general in the bill market, the short end was sold as some players aim to sell short and reinvest into the longer dated maturities. So while the short end was ticking up the longer end dipped slightly.

· Money Market – OBB was stable at 15.00% while unsecured rates averaged 18.00% today. Liquidity is still very tight, though the monthly statutory allocation has been approved and we expected the flows to hit the system but it appears some delays mean it is more likely early this week.


Hi          Low          Close          Prev.Close

USD/NGN   161.45/55         161.00/10          161.35/45          161.10/20

NIBOR (%)                            LIBOR (%)
O/N                  18.6250        USD 1 month        0.2703
7 Day                18.7708        USD 2 month        0.3870
30 Day             19.0000       USD 3 month         0.5283
60 Day             19.2500        USD 6 month        0.7483
90 Day             19.4583        USD 12 month       1.0652
Y/Y Consumer Inflation Oct 2011 :                       10.50%
FX Reserves: 24 November 2011:           (USD bn) 33.06
MPR                                                                             12.00%
Source: FMF & CBN



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