A Review of the Nigerian Energy Industry

Financial market update

12 September 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Central Bank of Nigeria Governor Lamido Sanusi said while the bank is “unhappy” about high interest rates, Africa’s largest oil producer needs the measure to curb price pressures and support the naira. Sanusi was responding to complaints, including from the finance ministry, about the record-high benchmark rate and its effect on sub-Saharan Africa’s second-largest economy. The central bank has kept its policy rate unchanged at 12 percent this year after raising it by 5.75 percentage points in 2011 to curb price pressures.

EUROPE: The European Union planned to unveil proposals for euro-area bank oversight that require unprecedented cooperation between the European Central Bank and national regulators. The Frankfurt-based ECB should expand its role as financial-system guardian by becoming the top-level supervisor of every lender in the 17-nation currency region, EU officials said in interviews. At the same time, the central bank would depend on national regulators for day-to-day supervision and ensuring that banks comply with European rules, according to the proposals.

CHINA: China’s stocks rose for the fourth time in five days after Premier Wen Jiabao signaled the government has more room for fiscal and monetary stimulus measures to boost economic growth. The Shanghai Composite Index rose 0.2 percent to 2,125.69 at 2:51 p.m. local time, as three stocks gained for each one that fell.

INDIA: Indian stocks rose for a sixth day, driving the benchmark index to a more than six-month high, as slower-than-estimated industrial production growth fueled speculation the central bank will cut interest rates next week. The BSE India Sensitive Index, or Sensex, increased 0.5 percent to 17,934.91 at 11:52 a.m. in Mumbai, headed for its highest close since Feb. 23.

Bonds – Bonds continued to be bought across the curve yesterday from sustained offshore demand.

Bills – Light demand on the long dated bills from 182dy bill up to 1yr maturities, this is in reaction to slowdown in OMO issuance this week to mop-up liquidity. Demand not sustainable though due to rising lending rates.

Money Market – OBB and ON rate close at 14.00% and 14.50% respectively as liquidity thins out.

                           Hi                Low           Close        Prev.Close
USD/NGN  158.20/30    157.60/70   157.90/00   157.70/80

Interest rates
NIBOR (%)                   LIBOR (%)
O/N             14.5000    USD 1 month        0.2268
7 Day           14.7500    USD 2 month        0.3188
30 Day        15.1250     USD 3 month        0.3988
60 Day        15.4583     USD 4 month        0.5014
90 Day        15.7917      USD 6 month        0.6869
USD 12 month      1.0145
Y/Y Consumer Inflation July 2012 :            12.8%
FX Reserves: 7 September 2012 (USD bn) 39.848
MPR                                                                    12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

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