Financial market update

01 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Minister of Finance and coordinating minister of the economy, Mrs. Ngozi Okonjo-Iweala, said on Monday that the Federal Government would inaugurate the Sovereign Wealth Fund by the end of the year. Okonjo-Iweala said on the sidelines of a conference in London that the government would announce the management team for the fund in August. She also disclosed that the government would issue a second Eurobond of at least $600m next year.

US: U.S. stocks slipped for a second day yesterday as investors await today’s monetary-policy decision from the Federal Reserve. The Standard & Poor’s 500 Index lost 0.4 percent to 1,380.28 at 1 p.m. in New York. The Fed began a two-day meeting yesterday as U.S. government data showed personal spending stagnated in June, while a private report said consumer confidence topped estimates.

INDIA: India’s rupee dropped, erasing a monthly gain, after the central bank kept interest rates unchanged and raised its inflation estimate. India’s currency declined 0.1 percent to 55.6575 per dollar in Mumbai, according to data compiled by Bloomberg. The central bank also lowered its estimate for India’s economic growth this fiscal year to 6.5 percent from 7.3 percent, and said it is ready to respond to any shocks arising from the “turbulent global environment.”

CHINA: China’s leaders pledged to keep adjusting policies to ensure stable economic growth this year as a state newspaper said some banks are telling branches to provide local-government loans. The Politburo reiterated that China will pursue a “prudent” monetary policy and “proactive” fiscal policy, signalling that authorities are trying to stem a six-quarter slowdown in the world’s largest economy without resorting to the level of stimulus implemented after the global financial crisis.

Bonds – Trading volume and demand gradually dropping on bonds yesterday, with yields already approaching 16.00% level which has been the floor in the last month, we expect a further drop in demand and intra-day volatility from profit taking trades.

Bills – Bill yields continued to drop due to persistent demand for securities across the various traded tenors in the market, about 25 – 40bps off opening levels in yesterday’s session finally bringing the market back to pre-MPC outcome announcement levels last week. Yields expected to settle around this level till we see some stability in the cash market.

Money Market – OBB and O/N rate flat at 14.50 and 15.50%, possible change today when market funds the FX auction.

                                 Hi               Low              Close              Prev.Close

USD/NGN     160.85/95    160.57/67     160.70/80     160.78/08


NIBOR (%)                        LIBOR (%)
O/N                  15.7083        USD 1 month            0.2457
7 Day                15.9583        USD 2 month            0.3378
30 Day             16.0833        USD 3 month            0.4426
60 Day             16.2917         USD 4 month            0.5461
90 Day             16.5000        USD 6 month            0.7259
USD 12 month           1.0535
Y/Y Consumer Inflation June 2012 :                        12.9%
FX Reserves: 25 July 2012 (USD bn)                        36.403
MPR                                                                                 12.00%
Source: FMD and CBN

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