Financial market update

30 November 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – The CBN governor, called for improvement of the nation’s infrastructure for sustainable economic growth. He said that the country would not experience sustainable growth if 70 % of the Federal Government’s budget was for recurrent expenditure and payment of salaries. Sanusi said that government should review its spending patterns to place emphasis on capital projects in critical sectors of the economy He said that less emphasis should be placed on allocations to recurrent expenditure in annual budgets.

Europe – Germany, Europe’s largest economy will be tipped into recession as the sovereign debt crisis roiling its neighbors extends into the new year according to the latest Bloomberg Global Poll. A slump in the German economy would remove a rate engine of demand for the rest of the continent probably extending the euro are wide recession which was confirmed last quarter. This would also pose as a challenge for Angela Merkel who is seeking a third term in election next year.

USA – Spending by US consumers probably stagnated in October as income gains slowed and super-storm Sandy deterred those in the Northeast from shipping. Household purchases were unchanged last month, the weakest reading since Jun. after advancing 0.8% in Sep. The report may also show incomes grew at 0.2% in Oct. compared to 0.4% in Sep.

China – Confidence in China’s economy is at the highest in more than a year amid optimism that the new leadership headed by Xi Jinping will be better for the financial climate according to a Bloomberg poll. The renewed faith in the economy reflects data from factory production to retails sales showing growth picking up this quarter after a seven quarter slowdown.

Bonds – Demand fed into the markets on Thursday as offshore interest seemed to come back though in small amounts but this helped to pull yields lower across the whole curve.

Bills – The CBN came out again yesterday to offer OMO bills but failed to sell anything at the auction without citing a reason. The short end continues to sell off as market players try to switch for better yields should the CBN continue their aggressive tight monetary stance with continued OMO issuance.

Indicative Currency Exchange Rates

1.2997       1.3007
EURUSD           1.6044      1.6054
GBPUSD            82.44        82.84
USDJPY             0.9266      0.9286
USDCHF            1.2344       1.2354
GBPEUR            8.7724       8.8724
USDZAR            157.50        158.00
USDNGN           1.9105        1.9605
JPYNGN            169.98        173.98
CHFNGN           204.70        208.70
EURNGN           252.69        256.69
GBPNGN           17.95            19.95
ZARNGN           1.2997          1.3007

Speculation on excessive gains saw WTI breaking past its 50-Day moving average as WTI fell as much as $0.60 to $87.47/bbl, while Brent settled lower at $110.50/bbl with WTI-Brent benchmark premium at $22.77.

Interest rates
NIBOR (%)                 LIBOR (%)
O/N              11.8333      USD 1 month         0.2135
7 Day            12.2500     USD 2 month         0.2570
30 Day         12.8333      USD 3 month        0.3105
60 Day         13.3750       USD 6 month       0.5270
90 Day         13.7083       USD 12 month      0.8610
Y/Y Consumer Inflation October 2012 :         11.70%
FX Reserves: 21 November 2012 (USD bn)    43.88
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   157.50/60   157.28/38  157.30/40    157.50/60

About the Author