Financial market update

23 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigerian Consumer Inflation eases to 12.8% YOY in July 2012 from 12.905 in June; Nigerian Food Inflation however rose to 12.10% YOY from 12.00%. STATS BUREAU
Nigeria, Africa’s largest oil producer, plans to increase exports of EA crude to two cargoes of 950,000 barrels each in October, one more than September, according to a loading plan obtained by Bloomberg News.

US: Federal Reserve policy makers signaled readiness to boost record stimulus unless they are convinced the economy is poised to rebound. Recent signs of strength may not be enough to satisfy them. U.S. stocks reversed losses yesterday and gold rose to a 16-week high on expectations of further easing by the central bank. Attention now turns to Fed Chairman Ben S. Bernanke’s Aug. 31 speech in Jackson Hole, Wyoming, where he may clarify his thinking on the need for stimulus in view of recent reports showing gains in retail sales and housing.

CHINA: China’s manufacturing may be contracting at a faster pace this month, signalling more monetary and fiscal stimulus is needed to secure a second-half rebound in economic growth. The world’s second-biggest economy may slow for a seventh straight quarter even after interest-rate cuts in June and July and accelerated investment approvals to counter an export slowdown. People’s Bank of China Governor Zhou Xiaochuan said yesterday that adjustments to rates and bank reserve requirements can’t be ruled out, as minutes of a Federal Reserve meeting fueled speculation that U.S. officials will ease.

Bonds – Another round of buying across the curve yesterday, demand still significant for bonds and expected to stretch into the coming weeks.

Bills – Liquidity inflows at the end of last week sustains the buying interest bills has witnessed in the last two trading session. OMO auction announcement however cautioned traders signaling CBN intentions to mop –up excess liquidity. Auction results not announced as at now but we expect lower cut-off rates due to current demand and liquid cash markets.

Money Market – Cash market reopened on Wednesday staying liquid, lending rates dip further to 11.50% on OBB and 11.75% on O/N rate, CBN has started moves on excess liquidity mop-up via OMO issuance there was an auction announcement yesterday which was however cancelled due to technical constraints, and we expect them in the market today.

CBN CUT- OFF RATE – $/NGN 155.80
No. of banks- 15

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Interest rates
NIBOR (%)                   LIBOR (%)
O/N            12.5833      USD 1 month          0.2365
7 Day          13.3750      USD 2 month          0.3340
30 Day       14.7500      USD 3 month          0.4308
60 Day       15.3333      USD 4 month          0.5374
90 Day       15.7083      USD 6 month          0.7162
USD 12 month        1.0410
Y/Y Consumer Inflation June 2012 :             12.9%
FX Reserves: 16 August 2012 (USD bn)        37.021
MPR                                                                      12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

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