A Review of the Nigerian Energy Industry

Financial market update

24 October 2012, Sweetcrude, Lagos – Local and international financial market update. Nigerian News – Nigeria will hold its first oil exploration bidding round for five years by the end of this year, while license renewal talks with Shell and Chevron over existing onshore fields are in their final stages.

Nigerian Foreign Exchange – There is a Bi – weekly FX Auction today.

Nigerian Bonds – it was a light selling day in bond market with the yield curve up about 12bps on average. No large demand expected into the markets this week.

Nigerian Treasury Bills – Bearish markets yesterday on the back of some profit taking. Market opened buying after the disappointment of no sales at the OMO auction on Monday and the failure of the CBN to come yesterday into the market at the end of the current cycle. The profit takers came out to take advantage of the early bullish trend leaving rates largely flat across the curve. An Auction is scheduled for today.

Nigerian Money Markets: OBB and unsecured O/N rates are stable at 12.00% & 12.50% to close yesterday ”

YEN: The dollar hovered near a three- month high versus the yen, supported by hopes for more bank of Japan monetary easing.

EUR: The Euro plunged and hit a one week low versus the dollar as concerns about a global economic slowdown and a spike in Spain’s borrowing cost spurred broad-based risk aversion.

GBP: Sterling hit a six – week low versus the dollar, tracking a weaker euro as weaker stocks and rising Spanish bond yields curbed demand for perceived riskier currencies.

ZAR: South Africa rand tumbled more than two percent against the dollar as labour unrest in the mining sector combined with concerns about the slowing global economy to drive investors out of the local unit.

Indicative Currency Exchange Rates
                                 Bid          Offer
EURUSD                1.2950       1.3050
GBPUSD                1.5950        1.6050
USDJPY                 79.50          80.00
USDCHF                0.9280      0.9350
GBPEUR                1.2250       1.2350
USDZAR                8.6500      8.6550
USDNGN               157.00       157.50
JPYNGN                1.9700       2.0300
CHFNGN               166.58       170.58
EURNGN              202.26       207.76
GBPNGN               247.70       255.20
ZARNGN               16.95          18.95

Commodities                                                                                                                                        Brent is behaving as expected – met with sufficient support at the low 107s number, which has been held 2 times already last 1 month. At the time of writing, it is already up $1.5/bbl from yesterday’s lows – should give good opportunity for more sellers to come to the market. A trend down signal cannot be confirmed at this stage however and it can as well rebound back to and above $111/bbl.

Interest rates
NIBOR (%)                        LIBOR (%)
O/N              12.1250         USD 1 month        0.21070
7 Day            12.7083        USD 2 month        0.26050
30 Day         13.8750        USD 3 month        0.31525
60 Day         14.6250        USD 4 month        0.38810
90 Day         15.0833        USD 6 month        0.55340
USD 12 month      0.88800
Y/Y Consumer Inflation September 2012 :     11.3%
FX Reserves: 22 October 2012 (USD bn)         42.23

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

                          Hi                Low         Close      Prev.Close
USD/NGN  157.30/40   157.04/14  157.23/33  157.15/25

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