Financial market update

19 September 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria’s central bank kept its benchmark interest rate unchanged at a record to support the naira and control inflation in Africa’s largest oil producer. The Monetary Policy Committee left the policy rate at 12 percent in a unanimous decision, Governor Lamido Sanusi told reporters yesterday in the capital, Abuja. That was in line with the forecasts of all 11 economists surveyed by Bloomberg News. Policy makers are focusing on price stability even as they face growing pressure from the Finance Ministry to reduce borrowing costs for the first time since 2009. While inflation slowed to 11.7 percent in August, it’s still above the central bank’s goal of under 10 percent.

EUROPE: European stocks climbed, halting a two-day decline, after the Bank of Japan joined the Federal Reserve in opting for further asset purchases to support the economy. The Stoxx Europe 600 Index gained 0.5 percent to 275.14 at 8:08 a.m. in London after falling 0.8 percent over the previous two days.

CHINA: Foreign direct investment in China declined in August for a third straight month as the impact of economic weakness in Europe and the United States worsened, the government said Wednesday. Foreign investment in factories, real estate and other assets declined 1.4 percent from a year earlier to $8.3 billion, the Ministry of Commerce said. That does not include investment in stocks and other financial assets. The decline is a setback for the communist government’s plans to encourage investment as a key part of its effort to reverse China’s economic downturn.

US: The United States’ current account trade deficit decreased 12.1 percent in the April through June quarter, pushed lower by an increase in American exports and cheaper oil imports. The Commerce Department said Tuesday that the current account deficit totaled $117.4 billion in the second quarter. That compares with a revised deficit of $133.6 billion in the first quarter, the largest in three years.

Bonds – Profit taking continued in yesterday’s session spreading to other parts of the curve. The 16.39% FGN JAN2022 remain well offered from offshore accounts up 26bps on the day.

Bills – Volatile session on Tuesday with trades on both buy and sell side across board, profit taking in the last hour however, reduced the impact of the dip in yields from an initial rally in the market. Auction today a definite indicator of new yield corridor in the market.

Money Market – OBB and ON rate maintained at 16.00% and 16.50% respectively.

                             Hi                 Low            Close          Prev.Close
USD/NGN   157.80/90   157.45/55   157.65/75    157.50/60

Interest rates
NIBOR (%)                  LIBOR (%)

O/N              16.4167      USD 1 month           0.2185
7 Day            16.5417      USD 2 month           0.3005
30 Day         16.8333     USD 3 month           0.3788
60 Day         17.1250      USD 4 month           0.4794
90 Day         17.3333      USD 6 month           0.6644
USD 12 month          0.9895
Y/Y Consumer Inflation July 2012 :                 12.8%
FX Reserves: 14 September 2012 (USD bn)    40.568
MPR                                                                          12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

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