A Review of the Nigerian Energy Industry

Financial market update

19 March 2013, Sweetcrude, Lagos – Local and internastional financial market update.
NIGERIA: A marginal increase was recorded in the nation’s inflation rate in the month of February, as figures released by the National Bureau of Statistics at the weekend put the current inflation rate at 9.5 percent as against 9 percent declared in January. The new rate is coming on the eve of a very important Monetary Policy Committee meeting of the Central Bank of Nigeria where the committee is expected to effect a cut in the policy rate.

EUROPE: European stock futures tumbled after the euro area forced Cyprus to adopt a levy on bank deposits, prompting concern that the single currency’s debt crisis will reignite. Futures on the Euro Stoxx 50 Index, a benchmark for the euro region, plunged 2.6 percent to 2,590 at 7:08 a.m. in London.

INDIA: The Reserve Bank of India, balancing the risks of economic growth at a decade low with “stubborn” inflation, will probably cut interest rates by a quarter-percentage point tomorrow, swap contracts indicate. The fixed rate to receive floating payments for a year fell to 7.50 percent today, approaching a seven-month low and 26 basis points lower than the RBI’s benchmark repurchase rate.

CHINA: China’s stocks fell, dragging the Hang Seng China Enterprises Index down 12 percent from this year’s high, as slowing growth and faster inflation spurred JPMorgan Chase & Co. to downgrade the nation’s shares. The Hang Seng China index plunged 2.2 percent to a three- month low of 10,775.62 at 3:05 p.m. local time.

Bonds – No let up in the volatility in the markets yet again on Friday, market bearish from start to finish with yields up 40bps on the Apr 17s in the biggest move of the day. Most of the selling was driven by panic setting into the market as onshore players long bonds look to de-risk as the naira has been showing signs of weakness.

Bills – As envisaged the CBN was out again to offer N150billion in OMO bills in an attempt to mop up the liquidity in the markets, selling N169.396billion at a discount of 10.64% this slowed activity in the markets on Friday though the long dated bills traded up about 15bps.

Money Market – OBB and unsecured O/N stable at 10.15% and 10.25% on Friday as the market remained very liquid. The MPC meets on Monday and Tuesday this week.

Indicative Currency Exchange Rates
Bid          Offer

EURUSD       1.2920       1.2930
GBPUSD        1.5088      1.5098
USDJPY         94.72         95.12
USDCHF       0.9434      0.9454
GBPEUR       1.1676        1.1686
USDZAR       9.1955        9.2955
USDNGN      158.05       158.80
JPYNGN       1.6686        1.7186
CHFNGN      167.53        171.53
EURNGN      204.20       208.20
GBPNGN       238.47        242.47
ZARNGN       17.19            19.19

West Texas Intermediate oil fell from the highest price in three weeks as an unprecedented levy on bank savings in Cyprus threatened to worsen Europe’s debt crisis. WTI for April delivery declined as much as $1.31 to $92.14 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.29 at 3:09 p.m. Singapore time.

Interest rates
NIBOR (%)                  LIBOR (%)

O/N              10.3333      USD 1 month          0.2032
7 Day            10.6250      USD 2 month         0.2415
30 Day         11.0417        USD 3 month         0.2801
60 Day         11.3333        USD 4 month        0.3321
90 Day         11.6250        USD 6 month        0.4449
USD 12 month       0.7310
Y/Y Consumer Inflation January 2013 :      9.00%
FX Reserves: 12 March 2013 (USD bn)       48.173
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 159.70/80   158.10/20     158.55/65    159.40/50

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