Financial market update

19 July 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria’s inflation rate rose to 12.9 percent in June, adding to pressure on the central bank to keep interest rates unchanged at a record high next week. Inflation in Africa’s top oil producer accelerated from 12.7 percent in May, the Abuja-based National Bureau of Statistics said yesterday in an e-mailed report. Prices increased 1.2 percent in the month.

EUROPE: Analysts are cutting European profit forecasts at the fastest rate since 2009 as the region heads for a recession and growth in China slows for a sixth quarter. Euro Stoxx 50 Index companies will earn 240 euros a share in 2012, 6.8 percent more than in 2011, according to more than 12,000 estimates compiled by Bloomberg. That compares with a 19 percent gain predicted at the start of the year. The reduction is the biggest since 2009, when analysts trimmed by 42 percentage points.

CHINA: Premier Wen Jiabao said July 7 that citizens are worried prices will rise again, reiterating a pledge that his government will “unswervingly” continue property controls. Recent data suggest buyers aren’t listening: property sales and prices have rebounded as local governments relaxed some housing restrictions and the central bank cut interest rates.

INDIA: The BSE India Sensitive Index, or Sensex, rose 0.5 percent to 17,185.01 at the close yesterday. Mamata Banerjee, a mercurial ally of Prime Minister Manmohan Singh, yesterday ended her opposition to the ruling Congress party pick to be India’s next president; fuelling optimism the government will announce measures to boost growth.

Bonds – Demand continued to show on the short end of the curve in reaction to the buying being witnessed in the bill market. Auction day yesterday as the market looks for direction on the long end.

Bills – Yet another day of buying on Wednesday pushing rates down an average 15bps as rates continue to dip the bill market.

Money Market – OBB and unsecured O/N rates trading at 14.75% & 15.00%

Offered: 300mio
Sold: 300mio
Marginal rate: 155.87
Weighted average: 155.90

Hi                 Low              Close          Prev.Close
USD/NGN  161.06/16   159.60/70   161.00/10  160.15/25

NIBOR (%)                           LIBOR (%)
O/N                15.3333             USD 1 month          0.2468
7 Day              15.5417              USD 2 month         0.3398
30 Day           15.7500             USD 3 month         0.4551
60 Day           16.0417             USD 4 month          0.5531
90 Day           16.7083            USD 6 month          0.7284
USD 12 month        1.0660
Y/Y Consumer Inflation June 2012 :                        12.9%
FX Reserves: 17 July 2012 (USD bn)                        36.420
MPR                                                                                 12.00%
Source: FMD and CBN

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