A Review of the Nigerian Energy Industry

Financial market update

16 January 2013, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Central Bank of Nigeria (CBN) Monday said that it was working towards achieving a six per cent inflation rate in the country, even as it defended its monetary policy framework. CBN Director, Financial Markets Department, Mr. Emmanuel Ukeje, said this at a roundtable titled: “Nigeria’s Fiscal and Monetary Crises: The Way Out,” organised by the Save Nigeria Group, in Lagos. Ukeje insisted that the poor state of infrastructure in the country was working against the effective transmission of monetary policy.

EUROPE: European car sales in December fell the most in more than two years as recessions in the southern part of the region cut demand at Ford Motor Co., General Motors Co. and Renault SA. The decline in December was the biggest since a 17% drop in October 2010. Industry wide deliveries last month in western Europe, which excludes countries that have joined the EU since mid-2004, dropped 15 percent to 781,830 vehicles. That pushed full-year sales down 8.1 percent to 11.8 million cars.

INDIA: Indian stocks dropped for the first time in four days after the central bank governor said concerns about inflation and economic growth leave the authority with “no room” for fiscal and monetary stimulus. The BSE India Sensitive Index, or Sensex, fell 0.2 percent to 19,951.18 at 12:08 p.m. in Mumbai after crossing the 20,000 level yesterday for the first time since January 2011.

CHINA: China’s foreign direct investment declined for the first full year since 2009 as economic growth slowed and manufacturers relocated to markets with cheaper labor, contrasting with outbound spending that surged to a record. Inbound FDI dropped 4.5 percent in December from a year earlier to $11.7 billion, the 13th decline in 14 months, according to Ministry of Commerce data released in Beijing today.

Bonds – Quiet session to start the day yesterday but this turned into a sell off as the provisional calendar for Q1 bond issuance in 2013 was released showing a significant increase in offer size over the next three months. Yields are likely to go up in anticipation that the auction next week is likely to push yields up at the primary. Likely to be quite volatile as the market reacts to the calendar.

Bills – Bullish markets yesterday even with the CBN coming out to offer OMO bills, selling 110billion in 128day bills at 13.03%.

Money Market – OBB and unsecured O/N rates up 25bps yesterday to close at 13.25% and 13.50%. Liquidity levels dipping on the back of the OMO activity of the CBN.

Indicative Currency Exchange Rates
Bid       Offer

EURUSD       1.3283    1.3293
GBPUSD       1.6039    1.6049
USDJPY       88.08      88.48
USDCHF      0.9297   0.9317
GBPEUR      1.2073    1.2083
USDZAR     8.8610     8.9610
USDNGN     156.17     156.92
JPYNGN     1.7730    1.8230
CHFNGN     167.98    171.98
EURNGN     207.44   211.44
GBPNGN     250.48    254.48
ZARNGN     17.62     19.62

Oil traded near the lowest level in almost a week in New York after U.S. crude stockpiles increased and the World Bank cut its economic growth forecasts. Crude for February delivery was at $93.51 a barrel, up 23 cents, in electronic trading on the New York Mercantile Exchange at 1:46 p.m. Singapore time.

Interest rates
NIBOR (%)                    LIBOR (%)

O/N               13.1250    USD 1 month         0.2057
7 Day            13.5000   USD 2 month        0.2500
30 Day         13.9583    USD 3 month        0.3030
60 Day         14.2500   USD 4 month        0.3536
90 Day         14.6250   USD 6 month         0.4900
USD 12 month       0.8140
Y/Y Consumer Inflation November 2012 :   12.3%
FX Reserves: 10 January 2013 (USD bn)        44.678
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  157.12/22  156.70/80  156.12/22  156.75/85

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