Financial market update

23 July 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigerian government revenue increased 32 percent to 763.6 billion naira ($92.7 billion) in June from the previous month, boosted by company and oil taxes. The government distributed 569.4 billion naira to federal, state and local administrations last month, Accountant-General of the Federation Jonah Otunla said in a statement handed to reporters in Abuja, the capital, on Thursday. The Federation Account Allocation Committee transferred 207.9 billion naira into Nigeria’s excess-crude account, which the government uses to save windfalls when international oil prices exceeds its budgeted price of $72 a barrel. That brought the total in the excess-crude account to $6.9 billion, Yerima Ngama, minister of state for finance, told reporters in Abuja on Thursday.

EUROPE: European policy makers received another vote of no-confidence in their efforts to stem economic turmoil as final approval for a bailout of banks in Spain prompted the euro to fall to its lowest in more than two years. The decision by euro finance ministers on Friday failed to offset developments elsewhere as Spanish Prime Minister Mariano Rajoy forecast a second year of recession and Valencia became the first state to say it would seek a bailout from the central government.

CHINA: Chinese Commerce Minister Chen Deming said Friday that the shift of some Chinese industries to African countries has boosted the competitiveness of products made on the continent. An increasing number of Chinese enterprises are eyeing the competitive advantages of labour and consumer markets in Africa, and have started to move their production there, Chen said in an interview with Xinhua.

Bonds – Renewed interest for bonds maintained in Friday’s session just after the auction which initially printed much higher than secondary market levels, most impact around the 2015 bond maturity off 40bps on Friday aligning to events in the bills market . Trend doesn’t however match market expectation on the prime rate decision at next week’s MPC meeting and as such some volatility expected early this week.

Bills – Bullish run sustained in Friday’s session making it an all-week long affair though illiquid moments disrupted trading flows towards the close of business. Yields trading at low levels are set to sustain volatility in the market this week as different views are traded ahead of the MPC meeting ending Tuesday 24th July 2012.

Money Market – OBB rate maintained at 14.00% but O/N rate closing 50bps up at 14.75%.

Hi              Low            Close       Prev.Close
161.90/00    161.00/10    161.17/27    161.70/80

NIBOR (%)                         LIBOR (%)
O/N                 15.1667           USD 1 month         0.2468
7 Day               15.5000          USD 2 month        0.3393
30 Day            15.7917            USD 3 month        0.4521
60 Day            16.0833           USD 4 month       0.5506
90 Day            16.2500           USD 6 month       0.7274
USD 12 month     1.0640
Y/Y Consumer Inflation June 2012 :                    12.9%
FX Reserves: 19 July 2012 (USD bn)                    36.371
MPR                                                                             12.00%
Source: FMD and CBN

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