A Review of the Nigerian Energy Industry

Financial market update

21 January 2013, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The recent spike in foreign portfolio flows into Nigeria’s capital markets Is giving the Central Bank of Nigeria (CBN) some concerns, on the back of a potential negative fallout from a sudden reversal of the flows. Foreign capital inflows into Nigeria, Africa’s top oil producer, rose 77 percent from the previous three months to $6 07 billion in the third quarter of 2012, according to a CBN report.

EUROPE: European finance ministers gathering for the first time this year begin the long march to enacting policies they promised to subdue the debt crisis, beginning with how to channel firewall funds directly to banks. At a meeting in Brussels today, where an assessment of Spain, Cyprus and Greece will feature, euro-area ministers are likely to clash over how and when the 500 billion-euro ($666 billion) European Stability Mechanism can bypass governments and provide direct help to banks.

INDIA: Indian Prime Minister Manmohan Singh’s decision to put his popularity on the line for lower diesel subsidies and a smaller budget deficit is cutting the risk of a junk debt rating. Indian Oil Corp. raised the price of the fuel for the first time in four months on Jan. 18, a day after the Cabinet allowed state refiners to set prices without government approval. The move, which followed a policy overhaul since September that lost Singh a coalition partner, will reduce the government’s annual subsidy bill by 150 billion rupees ($2.8 billion), according to the Australia & New Zealand Banking Group Ltd.

CHINA: Most Chinese stocks rose, as gains by property developers and industrial companies overshadowed declines among consumer staple and technology shares. About five stocks advanced for every four that fell in the Shanghai Composite Index, which gained 0.2 percent to 2,322.06 as of 1:09 p.m. local time.

Bonds – Relatively quiet session on Friday. Not much movement across the curve. Likely activity in the markets as the MPC meets Monday and as the first bond auction for the year takes place on Wednesday.

Bills – Yields dipped in the market on Friday as an injection of liquidity in the last two days put downward pressure across the maturities as rates dipped up to 100bps on some maturities. The CBN came out to try and mop up some of this liquidity offering N200billion but only selling 192.86 billion in tenors from 34-62 days between 11.80% -11.90%.

Money Market – OBB and unsecured O/N rates dipped a further 200bps on Friday to close at 10.15% and 10.25%. An additional liquidity injection coming from the FAAC inflow of about N283 billion.

Indicative Currency Exchange Rates
Bid        Offer

EURUSD        1.3313       1.3323
GBPUSD         1.5870      1.5880
USDJPY         89.61         90.01
USDCHF        0.9329      0.9349
GBPEUR        1.1920       1.1930
USDZAR        8.8850      8.9850
USDNGN       157.10       157.85
JPYNGN        1.7532       1.8032
CHFNGN       168.40      172.40
EURNGN       209.15       213.15
GBPNGN        249.32      253.32
ZARNGN        17.68         19.68

Oil dropped from the highest price in four months in New York before U.S. lawmakers vote this week on budget measures and European finance ministers meet today to discuss the debt crisis that threatens the region’s economy. WTI crude for February delivery, which expires tomorrow, fell as much as 51 cents to $95.05 a barrel and was at $95.10 at 3:06 p.m. Singapore in electronic trading on the New York Mercantile Exchange.

Interest rates
NIBOR (%)                      LIBOR (%)

O/N              12.7500          USD 1 month             0.2047
7 Day            12.9583          USD 2 month            0.2495
30 Day         13.7083          USD 3 month            0.3020
60 Day         14.0000         USD 4 month            0.3521
90 Day         14.2917           USD 6 month            0.4845
USD 12 month          0.8090
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    157.15/25   156.96/06   157.05/15   156.99/09

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