Financial market update

Financial markets15 August 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigerian stocks fell to a five-week low and lending rates spiked yesterday, a week after CBN withdrew N1 trillion from the banking system to curb liquidity and support the local naira currency. This has pushed up overnight lending rates to 19.5 percent, from 14 percent on Tuesday, while stocks fell for the third straight day, down 1.24 percent to 37,123 points. The CBN moves have so far failed to lift naira as strong dollar demand persists and lending rates rise.

US: Uncertainty about when the Fed will start scaling back its stimulus program has kept stocks under pressure. Recent economic indicators have presented a mixed view of growth and inflation, complicating predictions of the Fed’s next policy action.

EUROPE: Money markets are pricing out expectations of another European Central Bank interest rate cut as the euro zone returns to growth, though it is still seen as lagging in the United States and Britain in tightening policy. Forecast beating growth in France and Germany led the Euro zone out of its longest recession to date in the second quarter.

CHINA: China’s one-year interest-rate swap climbed for a fifth day, poised for the longest run of gains in eight weeks, as the central bank refrained from lowering borrowing costs in money-market operations today. The People’s Bank of China conducted 28 billion Yuan ($4.58 billion) of 14-day reverse-repurchase agreements at 4.1 percent, according to a statement on its website. This matches the rate at the last auction on Aug. 8 and compares with 4.50 percent on Aug. 1, when the contracts were made available for the first time since February. Seven-day reverse repos were conducted at 3.9 percent on Aug. 13, down from 4 percent last week and 4.4 percent on July 30.

INDIA: India increased efforts to stem the rupee’s plunge and stop capital outflows that are pushing the economy toward its biggest crisis in more than two decades. Policy makers’ moves since July to tighten cash supply, restrict currency derivatives and curb gold imports have failed to arrest the rupee’s slump to record lows as they struggle to attract capital to fund a record current account deficit. The rupee has weakened 28 percent in the past two years, the biggest tumble since the government pledged gold reserves in exchange for loans from the International Monetary Fund in 1991.

BONDS: Light session yesterday as the market awaits the results of the bond auction held yesterday. No clear market direction though there are sentiments that yields at the auction might close slightly higher than secondary market levels.

BILLS: The bill market still remained bullish in light of a reduction in supply as the OMO offerings have stopped for the time being. The downward moves in rates were not as aggressive as initially seen last week as the buying slowed somewhat. Rates backed up on the longer end though up about 20bps on the day.

MONEY MARKET: OBB and unsecured O/N rates traded up to 16.50% yesterday as market opened down N95billion. As a WDAS funding day the CBN repo window was closed to people funding WDAS transactions. An OMO maturity of N138billion today should help boost liquidity levels in the market.

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

Indicative Currency Exchange Rates
Bid       Offer

EURUSD      1.3288     1.3338
GBPUSD       1.5521      1.5571
USDJPY         97.79      98.19
USDCHF       0.9324    0.9354
GBPEUR       1.1680     1.1690
USDZAR       9.9500   10.1000
USDNGN      160.47    161.22
JPYNGN       1.6410    1.6910
CHFNGN      172.10    176.10
EURNGN      213.23    217.23
GBPNGN      249.07    253.07
ZARNGN       16.13       18.13

WTI rose for a fifth day as worsening violence in Egypt fanned concern over Middle East oil supplies and U.S. crude stockpiles declined for a second week. WTI for September delivery gained as much as 48 cents to $107.33 barrel in electronic trading on the New York Mercantile Exchange and was at $107.30 a barrel. It closed at $106.85 yesterday, the highest since August 2.

Interest rates
NIBOR (%)                        LIBOR (%)

O/N              18.0417             USD 1 month      0.1840
7 Day            18.0417             USD 2 month      0.2262
30 Day          18.2917             USD 3 month     0.2632
60 Day          18.5833            USD 6 month      0.3955
90 Day          18.8167             USD 12 month    0.6676
Y/Y Consumer Inflation June 2013 :        8.4%
FX Reserves: 17 July 2013 (USD bn)      46.923
MPR                                                               12.00%
Source: FMF, CBN, Reuters, Standard Chartered Bank

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