Financial market update

29 June 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The naira firmed against the dollar on the inter-bank foreign exchange market on Wednesday, supported by large dollar sales by units of two energy multinational companies and a slowdown in demand. Dollar sale by Shell (unit of Royal Dutch Shell) and (France) Total on Tuesday hit the market yesterday.

EUROPE: European stocks retreated after Spain’s bond yields surged and Germany’s unemployment rate rose more than forecast as a two-day summit of the region’s leaders started in Brussels. The Stoxx Europe 600 Index slid 0.5 percent to 244.67 at the close in London yesterday, after earlier dropping as much as 1.3 percent. The benchmark measure has fallen 10 percent from its high in March, paring its gain for the year to 0.1 percent, as the euro area’s sovereign-debt crisis threatened a slowdown in global growth.

INDIA: India is likely to face elevated inflation risks from supply bottlenecks and lingering threats to economic expansion, the Reserve Bank of India said. Growth in Asia’s third-largest economy slowed to a near- decade low last quarter, hurt by a faltering global recovery, political gridlock that has deterred investment and price pressures. Prime Minister Manmohan Singh, who took charge of the finance ministry two days ago, faces a budget deficit requiring record borrowing as well as a trade shortfall as he tries to revitalize his development agenda.

UK: U.K. stocks fell for the fifth day in six, as bank shares declined after British lawmakers criticized Barclays Plc over its manipulation of inter-bank lending rates. The FTSE 100 Index slid 30.86, or 0.6 percent, to 5,493.06 at the close in London yesterday.

Bonds- On Thursday, in reaction to the cutoff level at the auction, prices on most maturities recorded further decline as yields adjust to new levels. With a new level established in the market, volume of trades reduced significantly within the first hour of trading. Present market level is expected to be sustained for a few weeks.

Bills- In contrast to the bond market, a bullish run was recorded in the T-bill market yesterday due to the lower than expected cutoff level at the auction. Yields declined between 25-30bp across board as market closed at much lower levels than previous close.

Money Market – OBB and unsecured O/N rates trading at 14.00% & 14.50% today. Liquidity level got better as repayment from maturing T-bills totaling NGN202billion hit the system leaving the market net long.

Hi Low Close Prev.Close
162.95/05 162.58/68 162.90/05 162.45/65


O/N 14.6250 USD 1 month 0.2453
7 Day 15.0833 USD 2 month 0.3428
30 Day 15.6333 USD 3 month 0.4606
60 Day 16.9000 USD 4 month 0.5621
90 Day 16.3667 USD 6 month 0.7344
USD 12 month 1.0680
Y/Y Consumer Inflation May 2012 : 12.7%
FX Reserves: 27 June 2012 (USD bn) 36.829
MPR 12.00%
Source: FMD and CBN
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