01 March 2012, Sweetcrude, Lagos – Local and international financial market update
NIGERIA: The IMF has advised the Central Bank Nigeria (CBN) to halt monetary tightening measures which it had adopted since the beginning of last year to drive price stability. It said much as the tough tightening measures which helped rein in inflation to 10.30% as at December was commendable, a monetary framework better focused on a clear inflation objective should be more appropriate to help anchor inflation expectations and support disinflation. It further recommended greater exchange rate flexibility which it noted would also facilitate the pursuit of price stability.
USA: Federal Reserve Chairman Ben S. Bernanke said elevated unemployment and subdued inflation mean interest rates are likely to stay low, without offering any sign that the economy needs an additional monetary boost. While testifying to lawmakers yesterday in Washington, Bernanke suggested that there were “ positive developments” in the job market while saying it’s still “far from normal.” He also said the inflationary impact of higher gasoline prices is likely to be temporary.
INDIA: India embraced Pakistan’s plan to dismantle trade barriers for exports to its neighbor, auguring closer economic ties between the South Asian nations that have fought three wars since attaining independence six decades ago. “Flourishing trade is the biggest confidence building measure among any two nations” and improved economic engagement will help build peace and stability,, India’s Trade Minister Anand Sharma said in a statement yesterday. Sharma visited Pakistan last month, following the approval in December by Pakistan’s cabinet of a proposal to remove restrictions on prohibited imports from India.
Bonds – Ahead of today’s auction, some demand fed into the market yesterday as some players believed yields would drop below the 16.00% levels. Market activity has been quite thin and expectation is that the auction would provide some stimulus to market activity.
Bills – OMO auction season day three with the CBN reopening the 07-02-13 and 21-02-13 maturities yesterday offering N70bio across both securities. Rates went up on the long end, an average 30bps in reaction to the continuation in offering on the long dated maturities.
Money Market – OBB & unsecured rates stable yesterday at 12.50% & 13.00% respectively as the FAAC flow keeps the market liquid.
WDAS: CBN yesterday offered and sold $150mio, marginal rate maintained at 157.4590 [inc. the 1% commission].
Hi Low Close Prev.Close
NIBOR(%) LIBOR (%)
O/N 13.4583 USD 1 month 0.2435
7 Day 14.0000 USD 2 month 0.3568
30 Day 14.6667 USD 3 month 0.4843
60 Day 15.1667 USD 6 month 0.7488
90 Day 15.5417 USD 12 month 1.0598
Y/Y Consumer Inflation January 2012 : 12.60%
FX Reserves: 27 February 2012 (USD bn) 34.741
Source: FMD and CBN