Financial market update

17 September 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Revenues into the Nigerian treasury fell by nearly a third last month to 564.8 billion naira ($3.58 billion), from 825 billion naira the previous month, because of a drop in crude oil production, the accountant general said on Friday. The decline in crude was largely owing to a force majeure declared at the Bonny and a shutdown of the Balema Gas Plant. Jonah Otunla told a news conference.

EUROPE: Italian Prime Minister Mario Monti and German Chancellor Angela Merkel see developments over the past week as very positive for Europe’s chances of overcoming its debt crisis, Monti’s office said on Friday. They were referring to a decision by Germany’s Constitutional Court to give the green light for the ratification of the euro zone’s new bailout fund, a victory for pro-European parties in Dutch elections, and the European Central Bank’s announcement on Sept. 6 of a new and potentially unlimited bond-buying programme.

CHINA: The U.S. Export-Import Bank has dramatically stepped up its activity in China and is looking for even more opportunities to help finance U.S. exports to the world’s second-largest economy, the bank’s president said on Friday. The bank has helped finance more than $1 billion worth of exports to China in the current budget year, which ends Sept. 30 compared to about $15 million two years ago, he said

INDIA: After months of dithering on the economy, India’s beleaguered government roared back to life in dramatic fashion on Friday, announcing big bang reforms as part of a package of measures aimed at reviving growth and staving off a ratings downgrade. A day after sharply increasing the price of heavily subsidized diesel, the government said it was opening up its supermarket sector to foreign chains and would allow more investment in airlines and broadcasters. It also approved the sale of stakes in four state-run industries.

Bonds – Rally continues in the market as we approach the monthly auction where significant offshore demand is expected. Further dip in yields expected across the curve even as liquidity hits the market next week.

Bills – A run on bills on Friday’s session taking a cue from the bond market, expected liquidity inflow next week also sustained the trend. MPC also meets early next week where we do not expect any change in MPR and other monetary tools.

Money Market – OBB and ON rate close the week at 16.00% and 16.50% respectively, rates expected to ease next week after the federal allocation committee approved NGN570 bio to all tiers of government, this will be disbursed early this week.

                          Hi             Low            Close      Prev.Close
USD/NGN 157.70/80   157.20/30  157.45/55   157.70/80

Interest rates
NIBOR (%)                      LIBOR (%)
O/N             16.4170        USD 1 month      0.2200
7 Day           16.7080       USD 2 month     0.3045
30 Day        16.9580       USD 3 month      0.3853
60 Day        17.2080       USD 4 month     0.4854
90 Day        17.3330       USD 6 month      0.6729
USD 12 month    0.9970
Y/Y Consumer Inflation July 2012 :             12.8%
FX Reserves: 10 September 2012 (USD bn) 41.167
MPR                                                                     12.00%

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

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