A Review of the Nigerian Energy Industry

Financial market update

Financial-market27 April 2013, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Minister of Finance, Dr. Ngozi Okonjo-Iweala has said the nation’s tax to GDP ratio of 7% is not sufficient to build a strong economy. Okonjo-Iweala said this during a presentation at the spring meeting of the World Bank Group and the International Monetary Fund in Washington DC, according to a report by the News Agency of Nigeria on Tuesday. The minister spoke on the topic: ‘Fiscal policy, equity and long-term growth in developing countries’ at a forum of the World Bank. PUNCH

USA: The world’s largest economy probably accelerated in Q1 as consumer spending grew by the most in two years and US businesses rebuilt inventories. GDP rose at 3%pa after expanding at 0.4% pace in Q4 2012 accordingly to a median forecast of 86 economists surveyed by Bloomberg.

INDIA: On year interest rate swap rates headed for a fifth weekly decline on speculation cooling inflation will give the central bank room to cut interest rates at the next review on 3 May. This is following a 50bps cut executed by RBI governor Duvvuri Subbarao in Q1. The nations GDP rose 5% in the fiscal year ended 31 March 2013, the weakest pace since 2003.

CHINA: China’s top leaders said the country must guard against financial risks and boost consumption amid signs that the recovery in the world’s section biggest economy is faltering. Data this week showed China’s manufacturing is expanding at a slower pace adding to evidence a recovering is loosing steam after an unexpected slow down in growth in Q1.

Bonds – Volatile day on Thursday due to the massive sell-off across the bond curve, bond yields traded 30 – 40bps up to react to the trend on the bill curve. Demand remains weak and trend to be sustained into the new week.

Bills – Bearish and illiquid session in bills trading as yields traded 70 – 90bps up in reaction to the primary auction result. another OMO auction announcement was made however nothing was sold due to range of bids and low demand. It is quite clear that the CBN is not relenting on its mop-up exercise as cash markets will remain liquid for a long time to come.

Money Market – Lending rates stable at 10.25% and 10.50% on O/N and OBB respectively, cash markets up ngn387 bio.

Indicative Currency Exchange Rates
Bid        Offer

EURUSD         1.3029      1.3039
GBPUSD         1.5450       1.5460
USDJPY          98.81         99.21
USDCHF         0.9438     0.9458
GBPEUR         1.1857       1.1867
USDZAR          9.1177       9.2177
USDNGN        158.95       159.70
JPYNGN         1.6086       1.6586
CHFNGN        168.41        172.41
EURNGN        207.10       211.10
GBPNGN        245.58       249.58
ZARNGN        17.43           18.18

Crude erased its weekly gains after US jobless claims fell. WTI fell $0.48 to $93.16/bbl and Brent settled $0.36 lower at $103.05/bbl. WTI-Brent benchmark premium was at a low of $9.77 yesterday, the narrowest differential since Jan 2012.

Interest rates
NIBOR (%)                       LIBOR (%)

O/N              10.4583          USD 1 month           0.1982
7 Day            10.9167           USD 2 month          0.2398
30 Day         11.1667            USD 3 month          0.2756
60 Day         11.4583           USD 6 month          0.4304
90 Day         11.7500           USD 12 month        0.7110
Y/Y Consumer Inflation March 2013 :             8.6%
FX Reserves: 17 April 2013 (USD bn)              48.768
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    159.15/25     158.75/85     158.90/00     158.85/95

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