Financial market update

17 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria’s economy grew 6.17% in the first quarter of this year, down from 7.68% in the fourth quarter last year, according to official figures. Bank credit to the private sector grew 48% at the end of June, compared from the same period a year ago. Nigeria’s central bank figures showed, boosting demand for big-ticket purchases including vehicles.

EUROPE: European shares hit a five-month high on Friday, with a key index set to extend its best weekly winning streak in seven years, on expectations that policymakers might resolve their differences and work closely to tackle the European debt crisis. At 0707 GMT, the FTSEEurofirst 300 index of top European shares was up 0.1% at 1,105.41 points after rising to a high of 1,107.67, the highest since March when it hit a 2012 peak of 1,109.18.

INDIA: India’s food inflation is expected to remain high in the coming months. C Rangarajan head of Prime Minister’s Economic Advisory Council said after releasing a report on the country’s economic performance on Friday. India’s economy will grow at 6.7% in the current fiscal year, less than earlier estimate of 7.5 – 8.0 %. Rangarajan who was India’s central bank’s former governor, said in the report.

CHINA: China’s money market rates rose sharply on Friday as banks and other institutions set aside money to pay half-year corporate income taxes, typically due in late August, traders said. Cash calls for the tax payments aggravated an existing liquidity crunch that began early this week, provoked by a batch of bond issues, most of them by corporations, traders said.

Bonds – A bullish session across the curve yesterday riding on the new cut-off levels from the auction and signs of an imminent offshore invasion on bonds. We expect a further dip in yields which is to satisfy offshore interests.

Bills – Demand recorded on short-dated bills on Thursday after an all week sell-off, liquidity constraints continue to limit buy and hold strategy for traders in the market. An active session ahead today before the break in reaction to events in the money market.

Money Market – Lending rates remain volatile with a decline in rates to 18% on OBB from 22% and 20% on O/N from 25%, direction of rates today remain unclear as we brace for a long weekend to mark the end of Ramadan which will definitely put pressure on liquidity or a possible release of FAAC funds into the system today.

Hi Low Close Prev.Close
USD/NGN 157.45/55 156.26/36  156.95/05  157.25/35

Interest rates
NIBOR (%)                     LIBOR (%)
O/N                 20.0833     USD 1 month         0.2370
7 Day               20.2083     USD 2 month        0.3330
30 Day            20.4167       USD 3 month        0.4335
60 Day            20.7083      USD 4 month        0.5414
90 Day            21.0417       USD 6 month        0.7182
USD 12 month       1.0440
Y/Y Consumer Inflation June 2012 :                 12.9%
FX Reserves: 13 August 2012 (USD bn)            36.696
MPR                                                                           12.00%
Source: Reuters, Bloomberg, FMD, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

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