Financial market update

21 November 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – Nigerian MPC leave benchmark rate unchanged at 12.00%. The cash reserve requirement was also left unchanged at 12.00%. This decision was widely anticipated. They however noted risks to inflation from rising food prices caused by flooding in Nigeria as well as the fact that core inflation remains high.

Europe – The Euro weakened and Asian stocks erased gains after European finance ministers failed to agree a debt reduction package for Greece. With creditors led by Germany refusing to put up fresh money or offer debt relief the finance chiefs were unable to scrounge together enough funds from other sources to help alleviate Greece’s debt burden set to hit 190% of GDP in 2014. The next meeting is scheduled for Nov 26 to take discussions further.

India – Syndicated loan volumes in India slumped to the lowest since the global financial crisis started as the highest borrowing costs among Asia’s major economies made companies curb expansion and banks limit risk. Lending fell 64% to the equivalent of USD14.7bn since June 30 from a year earlier. CB Governor Duvvuri Subbarao this quarter cut his economic growth estimate to 5.8%, the slowest since 2003.

China – China’s money market rate dropped for the first time in three days on speculation capital inflows and the central bank’s cash injection will help meet lender’s month end funding requirements. The PBI’s gauged demand for 7 and 14 day reverse repurchase contracts before an auction tomorrow. Yuan positions at local banks accumulated from sales of foreign exchange to the PBOC and indicator of cross border capital flows into China rose Yuan 21.6bn in October in a second monthly gain.

Bonds – With the MPC expected to leave rates flat the market rallied yesterday across the whole curve especially with the expectation that the auction is likely to close lower

Bills – bullish also in the bill markets as the liquidity from FAAC put downward pressure on rates of all maturities. The auction will also likely feel the impact of the liquidity as there will be significant demand feeding into the auction. It is not unlikely that we will see the Central Bank come in to offer OMO bills later in the week in an attempt to mop up some of this excess liquidity.

Money Market – OBB and unsecured O/N rates eased yesterday to close at 10.00% & 10.25% as a liquidity injection came from the FAAC flows which hit the system early today.

Indicative Currency Exchange Rates
Bid             Offer

EURUSD           1.2748            1.2758
GBPUSD           1.5904            1.5914
USDJPY            81.84              82.24
USDCHF           0.9450           0.9470
GBPEUR           1.2474            1.2484
USDZAR           8.8867           8.9867
USDNGN          157.95            158.45
JPYNGN           1.9300           1.9800
CHFNGN          167.14            171.14
EURNGN          201.35           205.35
GBPNGN          251.20            255.20
ZARNGN          17.77               19.77

Oil rose on declining stockpiles as WTI traded at $87.40/bbl (+$0.65) while Brent declined to $109.83 (-$1.87) with the WTI-Brent benchmark premium remains at $23.08. API showed crude inventories has fallen 1.9mmbbls last week and the energy report today is expected to see supplies to rise by 1mmbbls

Interest rates
NIBOR (%)                   LIBOR (%)

O/N               14.1250      USD 1 month            0.2075
7 Day             14.5000     USD 2 month            0.2570
30 Day          14.7250      USD 3 month            0.3115
60 Day          14.9500      USD 6 month           0.5280
90 Day          15.7500      USD 12 month          0.8600
Y/Y Consumer Inflation September 2012 :        11.3%
FX Reserves: 15 November 2012 (USD bn)       43.37
MPR                                                                            12.00%
Source: Reuters Guardian, Bloomberg, Central Bank of Nigeria,
Financial Market Dealers Association Standard Chartered Bank Nigeria

Hi            Low          Close          Prev.Close
    157.95/05   157.55/65    157.85/95     157.83.93

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