Financial market update

13 February 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The FG has applied for $600 million (N93 billion) loan from the Islamic Development Bank (IDB). The minister of state for finance, Alhaji Yerima Lawan Ngama, who disclosed this in Abuja yesterday, said Nigeria’s application for the facility has passed the IDB scrutiny and received positive approval from the Board. According to the minister, disbursement of the facility will soon begin and it will be given out in tranches over a three-year period. The loan he said will be used to finance developmental projects in the country. [Nation]

EUROPE: European finance chiefs get the second chance in a week to pull Greece bank from the brink of collapse after lawmakers in Athens approved the austerity measures demanded for a financial lifeline. The finance ministers meet on Feb 15 to ratify a EUR13 bn bailout package to Greece.

CHINA: Chinese Premier Wen Jiabao said the nations needs t start fine tuning economic policies this quarter. These comments fuel speculation that the government will soon ease policy further to preserver growth as weaker exports and slower lending figures came out last month.

FX MARKETS: In the USD4 trillion a day, currency markets, traders calmed by a flood of central bank money are leaving safety for riskier bets. Borrowing in USD of JPY to buy high yielding Brazilian real, Mexican pesos has returns 5.5% this year. These developments are proving a challenge to emerging markets such as Brazil where policy makers renewed purchases of USD to keep the real from strengthening to fast and damaging growth.

Bonds – Bearish on Friday in trading all across the curve as the market starts positioning in the run up to this months auction which holds next week Wednesday. Yields on the long end went up an average 19bps.

Bills –
Relatively quiet market on Friday, yields dipped around 5 to 10bps.

Money Market – OBB & unsecured rates closed at 14.00% & 15.00% respectively.

Hi                     Low                     Close                  Prev.Close
USD/NGN         159.05/15     158.58/68       158.79/89          159.15/25

NIBOR(%)                              LIBOR (%)
O/N                     14.9167        USD 1 month                 0.2505
7 Day                  15.2917       USD 2 month                 0.3705
30 Day                15.8583       USD 3 month                 0.5060
60 Day                16.2833       USD 6 month                 0.6000
90 Day                16.6500       USD 12 month               1.0698
Y/Y Consumer Inflation December 2011 :                  10.30%
FX Reserves: 09 February 2012                          (USD bn) 34.9
MPR                                                                                               12.00%
Source: FMD and CBN

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