A Review of the Nigerian Energy Industry

Financial market update

02 October 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria’s economy has done well amid a global crisis followed by “a weak and uncertain recovery,” President Goodluck Jonathan said. “Nigeria’s gross domestic product has grown 7.1 percent on average” in the last two years, “driven mainly by the non-oil sector,” Jonathan said yesterday in a national broadcast to mark 52 years of independence. Africa’s top oil producer also secured 6.8 trillion naira ($43 billion) in foreign and local investment commitments during the same period, he said.

EUROPE: European stocks declined after the region’s equity benchmark yesterday rallied the most in more than three weeks. The Stoxx Europe 600 Index lost 0.5 percent to 270.93 at 8:02 a.m. in London, paring yesterday’s 1.4 percent rally. Standard & Poor’s 500 Index futures expiring in December rose 0.1 percent today, after the benchmark measure pared its advance in late afternoon trading yesterday.

US: The dollar weakened versus most of its 16 major counterparts on speculation signs of weakness in U.S. employment will encourage the Federal Reserve to sustain monetary stimulus that tends to debase the currency. The dollar rose 0.1 percent to 78.04 yen at 8:14 a.m. London time. It was little changed at $1.2883 per euro.

CHINA: The outlook for China’s steel industry is “a little more positive” than in previous months, after a slowdown in orders and lower prices forced producers to cut output, according to a survey by Macquarie Group Ltd. While data from a September survey of 40 steel mills, 30 steel traders and 30 iron-ore traders show that market conditions are still “tough” for the industry, “things do look a little more positive than in previous months,” according to the report.

Bonds – Strong performance on the 10.50% FGN MAR2014 on Friday as it outperformed other bonds after being well paid, off 54bps on Friday after an illiquid run through the week, also some profit taking trades on the 16.39% FGN JAN2022. Volatile week ahead due to expected liquid cash market, profit taking and Increased activity after the listing date.

Bills – Light run on bills on Friday by takers most especially on short dated bills for liquidity management. OMO auction done on Friday, ngn56.82 bio sold on 13dec t-bill. Big week ahead due to anticipated liquidity inflow.

Money Market – OBB and O/N rate closed last week at 10.75% and 11.00%. Total of ngn104.80 bio sold last week via OMO auction as liquidity mop-up continue. Big week ahead as ngn266.8 bio mature on the 4th October with no primary auction scheduled.

Indicative Currency Exchange Rates
                            Bid                    Offer
EURUSD           1.2897                1.2907
GBPUSD            1.6140                1.6150
USDJPY             78.03                  78.43
USDCHF            0.9381                0.9401
GBPEUR            1.2519                 1.2529
USDZAR            8.3631                 8.4631
USDNGN           157.15                  157.65
JPYNGN             2.0140                 2.0640
CHFNGN           167.52                   171.52
EURNGN           202.68                  206.68
GBPNGN            253.64                  257.64
ZARNGN            18.79                     20.79

Oil traded near the highest close in a week after a measure of U.S. manufacturing beat economists’ forecasts and before a report forecast to show shrinking fuel supplies in the world’s biggest consumer of crude. Crude for November delivery was at $92.33 a barrel, down 15 cents, in electronic trading on the New York Mercantile Exchange at 2:15 p.m. Singapore time.

Interest rates
NIBOR (%)                      LIBOR (%)
O/N            10.6667        USD 1 month        0.2135
7 Day          11.2083        USD 2 month        0.2863
30 Day       12.9167         USD 3 month        0.3553
60 Day       13.4167         USD 4 month        0.4524
90 Day       13.8333        USD 6 month        0.6307
USD 12 month      0.9668
Y/Y Consumer Inflation August 2012 :         11.7%
FX Reserves: 27 September 2012 (USD bn) 41.156
MPR                                                                      12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

                            Hi               Low             Close        Prev.Close
USD/NGN  157.35/45   157.10/20   157.15/25   157.12/22

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