A Review of the Nigerian Energy Industry

Financial market update

Financial-market30 September 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria’s Central Bank has announced new measures to tackle money laundering it says is weakening the naira currency and risks pushing up inflation, and which it suspects is linked to early political campaigning for 2015 elections. The CBN stated that available statistics indicate that Nigeria has become the largest importer of U.S dollars. It also explained that its twice-weekly wholesale foreign exchange auction will be replaced with a retail version requiring dealers to reveal the identity of their buyers. Corruption in the build up to the 2015 election is partly responsible for the increase, Governor Sanusi said at the Monetary Committee meeting on Tuesday, adding that it is absolutely wrong for bureaux de changes to buy hundreds of millions of dollars without accountability.

BONDS: Market opened bullish last week Thursday in an attempt to reflect the lower than expected cut-off levels at the treasury bills auction the day before. The rally was however unsustainable as the market gave way to the bears towards close. As at close, yields inched up slightly higher than the previous close.

BILLS: T-bills trading last week Thursday saw buying activities across all maturities, with higher demands for the longer-dated bills. Market yields however retraced towards end of trading to close at near market opening levels.

MONEY MARKET: OBB rates averaged 12% and ON rate 12.25% last week Thursday. Inter-bank rates reverted from the high levels seen the day before due to funding requirements for WDAS.

US: The U.S. government stands poised for its first partial shutdown in 17 years at midnight tonight, after a weekend with no signs of negotiations or compromise from either the House or Senate to avert it. Republicans and Democrats in Congress say they don’t want a shutdown, though neither side is budging from their positions to avoid one. House Republicans want to delay President Barack Obama’s Affordable Care Act for a year and make other changes to the health law. The Democrats vow not to let that happen. Hanging in the balance are 800,000 federal workers who would be sent home tomorrow if Congress fails to pass a stopgap spending bill before funding expires tonight.

EUROPE: Portuguese bonds are the euro- region’s worst performing securities in the past three months as investors penalize the nation for political turmoil even as they forgive similar ructions in Italy and Spain. Portugal’s bonds are losing value for the first quarter since 2011 after a rift emerged in the government over budget policy and amid concern the country may need a second economic support program from its neighbours. Spain and Italy, which also have been roiled by domestic political angst during the past three months, are the region’s second and third-best performers.

CHINA: China’s Yuan is poised to complete the fifth straight quarter of gains on stronger central bank fixings amid signs Asia’s largest economy is recovering from a slowdown. Manufacturing activity increased for the second month in September while exports advanced for a second straight month in August. The People’s Bank of China raised its daily reference rate, which limits the Yuan’s daily moves to 1 percent on either side, by 0.5 percent to 6.1480 this quarter. The currency’s appreciation has slowed since June 28 after gaining the most since 2011 in the previous three months amid a liquidity squeeze engineered by authorities to curb excessive lending.

COMMODITIES: WTI crude fell to the lowest in almost three months on concern that the U.S. government is headed for a shutdown over a budget stalement that would reduce demand in the world’s largest oil consumer. WTI for November delivery slide as much as $1.42 to $101.45 a barrel in electronic trading on the New York Mercantile Exchange, the lowest intraday price since July 5.

Indicative Currency Exchange Rates
Bid       Offer
EURUSD       1.3484      1.3534
GBPUSD       1.6145       1.6195
USDJPY         97.79        98.19
USDCHF        0.9061     0.9091
GBPEUR        1.1973     1.1983
USDZAR       10.1415   10.2915
USDNGN      159.35      160.10
JPYNGN       1.6295      1.6795
CHFNGN      175.86      179.86
EURNGN       214.87     218.87
GBPNGN        257.27    261.27
ZARNGN         15.71        17.71

Commodities
WTI crude fell to the lowest in almost three months on concern that the U.S. government is headed for a shutdown over a budget stalement that would reduce demand in the world’s largest oil consumer. WTI for November delivery slide as much as $1.42 to $101.45 a barrel in electronic trading on the New York Mercantile Exchange, the lowest intraday price since July 5.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N               14.1667      USD 1 month       0.1797
7 Day             14.5000     USD 2 month       0.2165
30 Day          14.8750      USD 3 month       0.2484
60 Day          15.1250      USD 6 month       0.3665
90 Day          15.3750      USD 12 month      0.6261
Y/Y Consumer Inflation August 2013 :           8.2%
FX Reserves: 26 September 2013 (USD bn) 45.668
MPR                                                                       12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

Fx
                               Hi                 Low              Close       Prev.Close
USD/NGN     160.10/20     158.80/90     159.85/95     161.55/65

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