Financial market update

Financial-market06 August 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Naira firmed against the U.S. dollar on both the interbank market and the official window on Monday as lenders held onto the local currency to meet the Central Bank’s new cash reserve limits. CBN hiked the cash reserve requirement for public sector deposits with banks to 50 percent from 12 percent two weeks ago in a bid to support the naira. Traders said the Naira is expected to appreciate further this week as banks short their dollar positions.

US: U.S. government debt prices fell on Monday as traders trimmed bond holdings after surprisingly strong data on the U.S. services sector and before auctions of new coupon supply. U.S. bond prices erased just some of Friday’s rise in advance of this week’s August refunding, during which the Treasury will sell $72 billion worth of coupon-bearing debt. With yields hovering near two-year highs, the upcoming supply might attract buyers, traders said.

EUROPE: IMF urges France to slow the pace of budgetary adjustment next year to protect a tentative return to growth. The IMF maintained its forecast for a 0.2 percent contraction of output this year despite signs that France is gradually retuning to growth in the second half. It forecast 0.8 percent growth for 2014.

INDIA: The rupee fell to a record low today, what traders said was dollar demand from importers, raising prospects for the Central Bank to take fresh steps to bolster a currency that has lost 12.6 percent since the start of May.

CHINA: China money rates fell slightly today after the People’s Bank of China injected 12 billion yuan through open market operations, bolstering confidence that the Central Bank is maintaining rate stability. Dealers interpreted the smaller than usual injection as a signal that the Central Bank is guiding rates back down slowly but intends to keep them relatively light.

BONDS: low volumes yesterday, resistance at current levels across most maturities with yields trading a tight range in the last week. We will possibly see an upward movement in yields should funding levels rise significantly.

BILLS: Lightly bearish markets yesterday; there was a lot of uncertainty in the market ahead of the CRR debits on Wednesday, where the increased requirement for public sector funds takes effect. The primary auction this week is also likely to spike should players find it difficult to raise liquidity.

OBB and unsecured O/N rates inched up 25bps to 10.50%. The markets remained liquid, opening up N782billion yesterday ahead of Wednesday’s CRR debit.

CBN WDAS AUCTION: CBN offered $300 million and sold $285.11 million, lowest intervention rate 157.3075 (1% commission inclusive). 17 banks bid.

Indicative Currency Exchange Rates
Bid       Offer

EURUSD       1.3255     1.3265
GBPUSD        1.5338     1.5348
USDJPY          98.51       98.91
USDCHF        0.9286    0.9306
GBPEUR        1.1571      1.1581
USDZAR        9.8300    9.9300
USDNGN       160.20     160.70
JPYNGN        1.6262      1.6762
CHFNGN       172.52      176.52
EURNGN       212.35     216.35
GBPNGN       245.71      249.71
ZARNGN       16.30        18.30

WTI crude fluctuated on speculation that Libyan production will increase. Crude swung between losses and gains as reports said that the country should pump 800,000 barrels a day next month from a current 700,000. WTI Crude for September delivery declined 10 cents to $106.84 a barrel on the New York Mercantile Exchange. Prices earlier climbed as much as 0.7 percent and dropped 1.2 percent.

Interest rates
NIBOR (%)                         LIBOR (%)
O/N              10.9167             USD 1 month         0.1860
7 Day            11.8333             USD 2 month        0.2270
30 Day         12.1667             USD 3 month        0.2654
60 Day         12.5000            USD 6 month        0.3955
90 Day         13.0833            USD 12 month       0.6664
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    160.20/30 159.10/20   160.10/20  159.68/78

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