Financial market update

09 July 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria’s naira advanced on Friday, set for its biggest weekly gain this year as oil producers sold dollars to meet month-end expenses and the central bank supplied the U.S. currency at auctions. The naira strengthened 0.8% to 160.80 per dollar as of 11.55am in Lagos, according to data compiled by Bloomberg. The naira is up 1.2% last week, the biggest gain on a closing basis since the five days to Dec. 30.

US: Job growth remained stuck in June, depriving President Barack Obama of progress on voters’ overriding concern with just four months before the election. U.S. employers added 80,000 jobs last month, below economists’ forecasts and up only slightly from a 77,000 increase in May. As the November presidential election approaches and voters’ impressions of Obama’s performance in office solidify, encouraging job gains at the start of the year have stalled. June concluded the worst quarter for private-sector hiring in more than two years, with last month’s 8.2 percent unemployment rate no better than in March.

INDIA: Low inflation is key to ensuring sustained economic growth, Reserve Bank of India Governor Duvvuri Subbarao said on Friday. Subbarao unexpectedly left interest rates unchanged last month as an inflation rate exceeding 7 percent limits room to add to a cut in borrowing costs in April, which was the first reduction since 2009. Central banks from China to Europe lowered rates on Thursday as the global economy falters.

CHINA: The People’s Bank of China lowered the benchmark 1 year lending rate by 0.31 percentage point on July 5 as waning demand from Europe, which buys about 20% of the nation’s overseas shipment, slowed growth in the world’s second-largest economy. A report due next week will show the economy expanded at the slowest pace in three years, according to the median estimate of 15 economists surveyed by Bloomberg.

Bonds– Bond yields closed last week pretty flat after an initial rally due to whispers of currency appreciation and possible offshore interest in the Nigerian space. Rally, however, short-lived by profit taking moves and clarity of no offshore inflows in the short term.

Bills– 1yr t-bill yield closed last week at 16.89% after being issued at 18.40% yield at the auction last week. A slowdown in yield volatility witnessed on Friday though trade volumes remain high reflecting differing views in the market of current yield levels. Volatility is expected to persist in the new week as the will be no 1yr t-bill issuance this week which is the investor’s favorite.

Money Market– OBB and O/N rates close the week at 15.50% and 16.00% respectively. Tight liquidity condition persists in the cash market.

Hi           Low          Close        Prev.Close
  161.85/95   160.60/70   161.90/00    161.85/95

NIBOR (%)                          LIBOR (%)

O/N                15.5833            USD 1 month                0.2458

7 Day              16.0000           USD 2 month               0.3413

30 Day           16.1667             USD 3 month               0.4576

60 Day           16.5000            USD 4 month              0.5601

90 Day           16.7500             USD 6 month              0.7364

                                                   USD 12 month             1.0695

Y/Y Consumer Inflation May 2012 :                              12.7%

FX Reserves: 05 July 2012 (USD bn)                             36.571

MPR                                                                                      12.00%

Source: FMD and CBN


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