A Review of the Nigerian Energy Industry

Financial market update

17 December 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Federation Account Allocation Committee (FAAC) has paid N161.59 billion into the Excess Crude Account (ECA), bringing the new balance to $9.66 billion. The Accountant-General of the Federation, Jonah Otunla, stated last week at the end of the Technical Sub-meeting of the FAAC on November returns. [NATION]

USA – Consumer spending probably rose in November as America’s set aside the threat of higher taxes next year while shopping for the holidays. Household purchases increased 0.4% last month after declining 0.2% in Oct. Auto sales also saw an increase in November as improving property values and falling fuel costs could be helping brace consumers against the more than $600bn in tax increases and government spending cuts that take effect in Jan without action from Congress.

CHINA – Hong Kong Stocks fell retreating from a 16 month high after a report signaled China’s new leaders may accept slower economic growht in favor of a more sustainable model. China said it will seek a higher “quality and efficiency” of growth next year compared to seeking “relatively fast” growth which was the agenda since 2006.

INDIA – Indian bond yields were at a seven week low on optimism easing inflation will create room for the central bank to relax monetary policy. The wholesale price index rose 7.24% in Nov compared with 7.45% in Oct. Purely going by inflation some believe that there could be a rate cut early next year. The monetary authority last reduced rates by 50 bps into 8% in April this year and reviews policy again tomorrow.

Bonds – Friday was a relatively quiet day in the markets, some demand feeding in seeing yields down about 6bps on average. The auction this week and the level of offshore participation will be a key indication of yield direction going into 2013.

Bills – With liquidity levels dropping activity in the bill market was muted, no OMO activity on Friday. We are not likely to have any more OMO until just before the maturity on the 20th.

Money Market – OBB and unsecured O/N rates went up 1.00% as the liquidity levels dropped due to funding today for WDAS. OBB and O/N closed at 14.00% and 14.50% respectively.

Indicative Currency Exchange Rates
Bid            Offer

EURUSD      1.3157          1.3167
GBPUSD       1.6171          1.6181
USDJPY        84.07          84.47
USDCHF       0.9183        0.9203
GBPEUR       1.2290        1.2300
USDZAR       8.6199        8.7199
USDNGN      157.80        158.30
JPYNGN       1.8770        1.9270
CHFNGN      171.84        175.84
EURNGN      207.62       211.62
GBPNGN      255.18        259.18
ZARNGN      18.31           19.06

Oil closed higher on Friday (Brent $109.15, WTI $86.73) after the Fed reported that industrial output in the US had limbed the most in two years. China’s manufacturing activity rose to a 14-month high in December, adding to signs the world’s second-largest economy is also recovering.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N              14.5000     USD 1 month          0.2090
7 Day            14.8333      USD 3 month         0.3080
30 Day         15.0833      USD 4 month         0.3610
60 Day         15.3750      USD 6 month          0.5110
90 Day         15.5417       USD 12 month        0.8440
Y/Y Consumer Inflation August 2012 :           11.7%
FX Reserves: 28 September 2012 (USD bn)  44.567
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  157.75/85    157.55/65    157.55/65    157.70/80

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