Financial market update

17 February 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The FG on Wednesday announced a revision of the 2012 budget proposal transmitted to the National Assembly, from N4.749 trillion earlier proposed to N4.648trillion. This is in order to make provision for subsidy arising from the partial subsidy phase out, which saw the pump price of fuel reduced from N141/ltr to N97/ltr. Ngozi Okonjo Iweala, Minister of Finance and Coordinating Minister for the economy confirmed a sizeable cut in the total proposed budgetary expenditure by N100.25 billion, mainly from administrative cost, training, transport and others.

CHINA: China’s housing market is experiencing the ‘‘mother’’ of all bubbles, and a property slump will hurt everything from Australian mining firms to Europe’s luxury-goods makes, according to Grantham, Mayo, Van Otterloo & Co.

EUROPE: The euro rose yesterday on a report the European Central Bank is exchanging Greek bonds for new securities. The Euro was up 0.3 percent to $1.3107 after dipping below $1.30 earlier for the first time since Jan. 25. Finance ministers wrangled over how to close the funding hole in a teleconference on Wednesday night after seeing estimates that Greece’s debt would fall to 129 percent of gross domestic product in 2020, missing a target of 120 percent.

US: Stocks rose by 0.8% to 1,354.27, rebounding from a two-day drop in the Standard & Poor’s 500 Index. This was as data on jobless claims, housing starts and manufacturing fuelled optimism in the economy.

Bonds – Bond yields further dipped in Thursday’s session due to renewed interest across the curve after an initial suspension of the monthly auction. Stable liquidity levels in the cash market backing this trend expected to run into the coming week.

Bills – Bills continue to be bought with significant demand recorded on the 1yr bill, the last issued 1yr bill dipped 83bps in yesterday’s session due to offshore demand. Auction next week is expected to be fully subscribed given the recent trend of demand on short-tenor high yielding assets.

Money Market – OBB and Unsecured rates stable at 14.00% and 14.50% respectively, cash market fairly liquid with a balance of ngn96.2 bio.

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O/N 14.5000 USD 1 month 0.2455
7 Day 14.8333 USD 2 month 0.3605
30 Day 15.3167 USD 3 month 0.4931
60 Day 15.6667 USD 6 month 0.7521
90 Day 16.0000 USD 12 month 1.0661
Y/Y Consumer Inflation December 2011 : 10.30%
FX Reserves: 16 February 2012 (USD bn) 35.036
MPR 12.00%
Source: FMD and CBN
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