Financial market update

03 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, on Wednesday dismissed the report by Fitch Ratings on Nigerian Deposit Money Banks that their assets quality was at risk. Sanusi said in an investment conference in London that he was not worried by the report, but, pointed out that the banks should be increasing their lending to small and medium-term enterprises. Reuters quoted Sanusi as saying, “In my job, I have more information on the banks than Fitch has, and I don’t have the concerns that Fitch has.

EUROPE: European Central Bank President Mario Draghi said the ECB may wade forcefully into bond markets in tandem with Europe’s rescue fund, stepping up its crisis response despite the reservations of Germany’s Bundesbank. The euro declined yesterday, and Spanish bond yields rose on disappointment that Draghi didn’t signal imminent ECB action. While Draghi said the Bundesbank has reservations about ECB bond purchases, and the details of the plan still need to be hammered out, the proposal nevertheless signals a new chapter in the battle against the debt crisis.

CHINA: Chinese regulators, seeking to arrest a 14 percent slide in the nation’s stock market since this year’s high on March 2, reduced transaction fees on equities trading by 20 percent. The reduction will take effect Sept. 1 and save investors 600 million yuan ($94 million) in transaction-related fees in the final four months of the year, the China Securities Regulatory Commission said on its website on Wednesday.

INDIA: Indian stocks declined for the first time in five days as investors await a policy announcement by the European Central Bank after the Federal Reserve refrained from adding stimulus to the U.S. economy. The BSE India Sensitive Index, or Sensex, lost 0.2 percent to 17,224.36 at the close yesterday.

Bonds – Bond yields up 22bps across the yield curve, further correction expected of an upward shift in yields as tight liquidity condition persists.

Bills – Sharp reaction in the bills market due to the new directive issued by the CBN yesterday, market recorded a 80-120bps correction upward on all traded bill maturities as liquidity tightens in the cash market. Volatility expected to be sustained into the new week.

Money Market – Extremely volatile session as lending rates hit an all year high of 22%, market however settled at 17.00% on OBB and O/N rate.

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161.50/80 160.95/05 161.50/60 161.00/10


NIBOR (%)                       LIBOR (%)
O/N              18.2500       USD 1 month          0.2443
7 Day            18.8333       USD 2 month          0.3368
30 Day         19.0417        USD 3 month          0.4419
60 Day         19.2500       USD 4 month          0.5464
90 Day         19.4167        USD 6 month          0.7252
USD 12 month        1.0482
Y/Y Consumer Inflation June 2012 :                 12.9%
FX Reserves: 01 August 2012 (USD bn)            36.500
MPR                                                                           12.00%
Source: FMD and CBN

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