Financial market update

16 December 2011, Sweetcrude, Lagos – Local and international financial market update.
· EUROPE – Euro nations may have to pay more to borrow USD1.1 trillion next year as cash-strapped banks cut back on making markets in government bonds. Market experts say that some poor auction results that were seen recently in many countries were probably a reflection of financial constraints among primary dealers.

· YUAN – China’s Yuan strengthened the most in two months as signs credit curbs are easing bolsters optimism policy makers will avoid a sharp slowdown in the world’s second largest economy. The People’s Bank of China set its daily reference rate 0.1 percent stronger at 6.3352 per dollar, after fixing it weaker for three days.

· INDIA – India’s central bank refrained from raising interest rates for the first time in eight meetings as inflation cools and the fallout from Europe’s debt crisis threatens growth. The rupee pared gains and bonds rose.

· Economic / Central Bank News
Controversy and speculation are trailing the government’s omission of allocation to fuel subsidy in next year’s budget. Some Nigerians interpreted the omission as a subtle way of saying fuel subsidy is over while others believe it is a smoke screen in the interim.

· Bonds – Very quiet session yesterday though liquidity returned to the 2018s and 2019s after and extra injection of supply from Wednesday’s auction. Market activity is expected to continue to be relatively muted over this festive season and in the run up to the New Year.

· Bills – Also a quiet market yesterday bearish across most maturities with demand feeding in only on the January 2012 maturities.

· Money Market – OBB stable at 14.00% with unsecured rates dipping 50bps to 15.50% as the market is fairly liquid opening long about N40billion.

                          Hi                 Low            Close        Prev.Clsoe
USD/NGN     162.35/45    162.00/10   162.16/26  162.10/20

NIBOR(%)                         LIBOR (%)
O/N               15.5417        USD 1 month        0.2846
7 Day             15.9583       USD 2 month        0.4114
30 Day          16.3750       USD 3 month        0.5592
60 Day          16.6667       USD 6 month        0.7830
90 Day          16.9167       USD 12 month       1.1059
Y/Y Consumer Inflation Oct 2011 :                  10.50%
FX Reserves: 08 December 2011     (USD bn) 33.144
MPR                                                                       12.00%
Source: FMD and CBN

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