Financial market update

03 September 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria is making progress on reforms long-stalled since 2007 in various sectors of its economy, even at its dire infrastructure deficit and worsening insecurity in parts of the country mask the momentum. Nigeria’s infrastructure deficit is estimated at $200 billion or $20 billion a year, for the next 10years, according to the Urban Development Bank of Nigeria.

EUROPE: European stocks declined for a second week, the first back-to-back losses since May, as economic data from Japan to Germany added to evidence that global growth is slowing. The benchmark Stoxx 600 lost 0.7 percent to 266.23 last week, trimming its advance in August to 1.9 percent. The gauge has climbed 14 percent from this year’s low on June 4 amid speculation central banks around the world will take further measures to support the economy.

CHINA: The central banks of Taiwan and China signed a yuan clearing agreement as Asia’s biggest economy pushes the use of its currency in international trade. China has been expanding its currency relations with trade partners to promote greater use of the yuan in global trade and investment. Nations including Singapore, Japan, and Thailand have signed similar deals with the world’s second-biggest economy as part of their efforts to reduce reliance on the dollar.

INDIA: India’s economy grew more than estimated last quarter after the central bank cut interest rates to support spending at home as Europe’s debt crisis crimped export growth Gross domestic product rose 5.5% in the three months through June from a year earlier, faster than the three-year low of 5.3% in the previous quarter, data from the Central Statistical Office in New Delhi showed on Friday.

Bonds – Trading activity remain illiquid and volatile, bond yields continue to dip across the curve due to the massive demand recorded from all stakeholders in the last week at a time the cash market is very liquid.

Bills – Buying interest returns on bills in the face of no sales at the OMO auction yesterday, yields dip another 30 – 40bps across board in a tight and illiquid session. Rally expected to continue in the new week as the CBN seem to be comfortable with the trend in the market on yields and liquidity.

Money Market – Lending rates close last week at 10.50% and 10.75% on O/N and OBB rates respectively, cash market remains liquid into the new week.

Hi Low Close Prev.Close

Interest rates
NIBOR (%)                       LIBOR (%)
O/N              10.5833          USD 1 month             0.2305
7 Day            11.7500           USD 2 month            0.3275
30 Day         12.9583           USD 3 month            0.4183
60 Day         13.6667           USD 4 month            0.5249
90 Day         14.4167            USD 6 month            0.7077
USD 12 month          1.0320
Y/Y Consumer Inflation June 2012 :                      12.9%
FX Reserves: 29 August 2012 (USD bn)                38.620
MPR                                                                               12.00%

Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

About the Author