Financial market update

Financial markets23 July 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: We expect the Monetary Policy Committee of the Central Bank of Nigeria (CBN) to keep its monetary policy rate on hold at 12% when it announces its interest rate decision on Tuesday. Concerns over weak oil output and the beginnings of the country’s electoral cycle, with the associated risks to FX stability, are likely to keep the CBN cautious despite the deceleration in inflation to 8.4% y/y in June, and expectations that inflation will remain in single digits for the rest of 2013.Some confidence has returned to the Nigerian market. Portfolio outflows from Nigeria, associated with expectations of Fed QE tapering, were largely confined to May and June. These outflows were comfortably accommodated by the CBN, with only a marginal impact on FX reserves. Nonetheless, the authorities will want to replenish FX reserves, which may be at risk in the future from falling oil output.

EUROPE: Switzerland is seeing more money flow into foreign currencies than any time since the start of the credit crisis as signs of stability in the global financial system damp the franc’s haven appeal and encourage traders to step up bets on declines. Foreign-currency assets in Swiss resident bank accounts used for investment climbed to 787 billion francs ($841 billion) in May, the most since December 2007, from 778 billion francs the prior month, data from the Swiss National Bank yesterday show.

INDIA: India’s rupee gained after the central bank tightened restrictions on gold imports to curb the current-account deficit and as an unexpected decline in U.S. home sales eased concern the Federal Reserve will trim stimulus.

CHINA: China’s benchmark stock index rose the most in almost two weeks as investors speculated the government will lift spending on railroads and environmental gear to maintain economic growth of at least 7 percent. CSR Corp. and China Railway Construction Co. rallied more than 7 percent after China Business News reported state-run China Railway Corp. may increase investment for railway construction this year.

BONDS: Market was relatively quiet again today as players continue to look to the MPC meeting today. Some late demand on the 16.39% Jan 22s feeding into markets before the close which forced most of the other security yields down

BILLS: Light demand feeding into the market yesterday with most of the focus long dated. A bit of a cautious day and same expected tomorrow ahead of the MPC meeting.

MONEY MARKET: OBB and unsecured O/N rates stable at 10.10% and 10.15% as the FAAC flow from last week and bill maturities are keeping market liquid.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD        1.3193        1.3203
GBPUSD        1.5368        1.5378
USDJPY          99.42          99.82
USDCHF        0.9355       0.9375
GBPEUR        1.1649         1.1659
USDZAR        9.8500       9.9500
USDNGN       160.80        161.30
JPYNGN        1.6174         1.6674
CHFNGN       171.89         175.89
EURNGN      212.14         216.14
GBPNGN       247.12        251.12
ZARNGN       16.32           18.32

COMMODITIES: WTI crude fluctuated after dropping the most in more than a week as weaker-than-forecast U.S. economic data raised concern that growth will stall in the world’s biggest consumer of oil. WTI for September delivery was at $106.65 a barrel, down 29 cents in electronic trading on the New York Mercantile Exchange at 3:04 p.m. in Singapore.

Interest rates
NIBOR (%)                      LIBOR (%)
O/N              10.2417          USD 1 month        0.1905
7 Day            10.5417          USD 2 month        0.2293
30 Day         10.8100         USD 3 month        0.2647
60 Day         11.0600         USD 6 month        0.3965
90 Day         11.3100          USD 12 month      0.6809
Y/Y Consumer Inflation June 2013 :             8.4%
FX Reserves: 17 July 2013 (USD bn)            46.923
MPR                                                                     12.00%
Source: FMD and CBN
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

                              Hi                 Low          Close        Prev.Close
USD/NGN     161.25/35     160.80/90   161.20/30   161.15/25

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