A Review of the Nigerian Energy Industry

Financial market update

05 November 2012, Sweetcrude, Lagos – Local and international financial market update
Nigeria – The amount of USD offered by the CBN at its regulated Wholesale Dutch Auction System (WDAS) decreased by USD340 million (21.38%) to USD1,250 billion in October when compared to the USD1,590 offered in September. The NGN appreciated slightly in the month under review as a result of a decline in demand for dollar. Specifically the local currency gained 3 kobo to close at 155.74 to the dollar on the last trading day of October held last Wednesday compared to the 155.77 to a dollar it stood on October 3.

USA – The market seems to believe that no matter who wins the election tomorrow, the economy is on course to enjoy faster growth in the next four years as the headwinds that have held it back turn into tailwinds. Consumers are spending more and saving less after reducing household debt to the lowest since 2003. Home prices are rebounding after falling more than 30% from their 2006 highs and banks are increasing lending after boosting equity capital by more than USD300 billion since 2009.

India – Indian Prime Minister Manmohan Singh and the Congress Party’s top leadership used a mass rally in the capital to unite behind steps to further open the economy to foreign investment ahead of a crucial parliamentary session. The plan that began being unveiled in mid September is being considered the biggest policy push in a decade to overhaul and economy growing at near its slowest pace in three years. The changes proposed include by not limited to allowing foreign investment in multibrand retail outlets, the pensions and insurance industries, aviation, broadcasting, power exchanges and a decision to raise diesel prices to stem a fiscal deficit.

China – China’s service industries rebounded from the slowest expansion in at least 19 months adding to manufacturing against that indicate the world’s second biggest economy is revering from a seven quarter slowdown. The PMI rose to 55.5 in October from 53.7 the previous month. Growth in services along with two reports last week that showed a pickup in manufacturing industries may ease pressure on China’s leaders to roll out more stimulus as they start a once a decade power transfer Nov. 8. The Central Bank said the economy is excepted to maintain “steady and relatively rapid growth” as earlier government policies to support expansion take effect.

Indicative Currency Exchange Rates
Bid            Offer

EURUSD           1.2824         1.2834
GBPUSD           1.6027          1.6037
USDJPY             80.38          80.78
USDCHF           0.9409        0.9429
GBPEUR           1.2497         1.2507
USDZAR           8.7488        8.8488
USDNGN          156.85         157.35
JPYNGN           1.9514          2.0014
CHFNGN          166.70         170.70
EURNGN          201.14         205.14
GBPNGN          251.38         255.38
ZARNGN          17.93           19.93

The energy complex was weak throughout Friday, and is now trading near its lowest level in almost four moth as refineries in NJ remained shut,curbing demand for crude .

Interest rates
NIBOR (%)                      LIBOR (%)

O/N              12.5000          USD 1 month            0.2090
7 Day            13.2500          USD 2 month            0.2605
30 Day         14.4583           USD 3 month            0.3128
60 Day         15.3333           USD 6 month            0.5380
90 Day         15.7500          USD 12 month           0.8750
Y/Y Consumer Inflation September 2012 :           11.3%
FX Reserves: 31( October 2012 (USD bn)             42.67
MPR                                                                              12.00%
Source: Reuters Guardian, Bloomberg, Central Bank of Nigeria,
Financial Market Dealers Association Standard Chartered Bank Nigeria

                               Hi            Low          Close         Prev.Close
USD/NGN     157.22/32  156.96/06   156.98/08  156.97/07

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