Financial market update

24 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria’s inflation may peak this month or in September before declining toward the end of the year, Governor Lamido Sanusi told reporters on Wednesday in Abuja, the capital. The Central Bank of Nigeria had previously forecast that price growth would accelerate to as fast as 14.5 percent in the third quarter. Data earlier this month showed inflation was little changed at 12.8 percent in July. The median estimate in a Bloomberg News survey was for inflation to accelerate to 13.9 percent. The central bank has kept its policy rate unchanged at a record 12 percent this year, after raising it by 5.75 percentage points in 2011 to curb price pressures.

EUROPE: European stocks were little changed before meetings between euro-area leaders to ‘‘try and coordinate a response and encourage the Greek to pursue pre- agreed targets”. The Stoxx 600 rose less than 0.1 percent to 267.80 at 8:05 a.m. European stocks are heading toward a 1.9 percent drop this week, which would snap 11 weeks of gains.

CHINA: The yuan has lost 0.9 percent against the dollar this year as China’s export growth slowed amid Europe’s debt crisis. The central bank is easing controls on the exchange rate and in April doubled the trading band against the dollar to 1 percent on either side of its daily reference rate.

INDIA: Indian stocks dropped the most in about a month and the rupee ended a four-day rally on concern the government may miss its budget deficit target. The BSE India Sensitive Index fell 0.4 percent to 17,779.6 at 12:28 p.m. in Mumbai, poised for the biggest drop since July 26.

Bonds – Calm session yesterday matched with a slowdown in demand for bonds across the curve as against what has been witnessed in previous sessions. Yields still expected to dip further across the curve.

Bills – Yields continued to drop on Thursday across board due to current market liquidity and strengthened demand from all stakeholders, trend to be sustained into the coming week except we see some mop-up moves by the CBN via OMO bills.

Money Market – Cash market remains liquid with OBB and O/N rate maintained at 11.50% and 11.75% respectively, excess liquidity inflow of about ngn65 bio in yesterday from a maturing t-bill.

                           Hi                Low            Close          Prev.Close
USD/NGN  158.30/40     157.95/05     158.25/35    157.95/05

Interest rates
NIBOR (%)                         LIBOR (%)
O/N               11.5833            USD 1 month               0.2355
7 Day             12.2917            USD 2 month               0.3310
30 Day          12.8750            USD 3 month              0.4269
60 Day          13.2917             USD 4 month              0.5339
90 Day          13.6250            USD 6 month              0.7137
USD 12 month            1.0400
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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