Financial market update

Financial markets11 October 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Money supply falling on CBN tightening – Nigeria’s M2, a broad measure of money supply, has been falling in the past three months as the CBN intensifies its war against excess liquidity in the system. A contraction money supply is usually a concern for most economies as it denotes slowing growth and economic activity and lower monetary velocity. Sanusi Lamido, the CBN governor, has also hinted that the apex bank is more likely to tighten monetary policy than ease it in the months ahead.

EUROPE: European Central Bank President Mario Draghi said policy makers’ pledge to keep interest rates low explicitly allows for cuts in borrowing costs if market volatility resumes. “The Governing Council has unanimously agreed to incorporate an easing bias that explicitly provides for further rate reductions, should the volatility in money market conditions return to the levels observed in early summer,” Draghi said at the Economic Club of New York yesterday.

INDIA: India’s 10-year government bonds headed for a second week of gains, the longest advance since May, after the Reserve Bank of India rolled back some measures taken to shore up the rupee following a rebound in the currency. RBI Governor Raghuram Rajan reduced the marginal standing facility by 50 basis points to 9 percent this week, the second cut in less than a month, as the currency rebounded 13 percent from a record low of 68.845 per dollar on Aug. 28. He also lowered the bank rate to 9 percent, while keeping the benchmark repurchase rate at 7.5 percent.

Bonds: Relatively quiet market yesterday, yields traded flat on almost all tenors except the June 19s trading about 7bps lower than yesterday’s cut off.

Bills: Another lightly bearish yesterday as the CBN came out to offer OMO bills selling N19.2billion in 154 days bills at 12.20% discount and N90.2billion in 182 days bills at 12.25%. The OMO activity is likely to continue as the CBN tries mop up liquidity in the system.

Money Market: OBB and ON traded down to 10.50% today. Market still liquid though NGN109.4 billion was issued in OMO bills today.

Indicative Currency Exchange Rates
Bid       Offer

EURUSD     1.3535      1.3545
GBPUSD     1.5988      1.5998
USDJPY       98.37        98.77
USDCHF     0.9106     0.9126
GBPEUR     1.1812       1.1822
USDZAR     9.8945     9.9945
USDNGN    160.25      161.25
JPYNGN     1.6291       1.6791
CHFNGN    175.98      179.98
EURNGN    216.90     220.90
GBPNGN     256.21     260.21
ZARNGN      16.20       16.95

WTI’s discount to Brent crude widened to a four month high as the detention and release of Libya’s leader sparked concerns that renewed instability may further curb the country’s exports. WTI rose by 0.6% while Brent rose by as much as 1.6% after Prime Minister Ali Zaidan was released hours after being seize at a Tripoli hotel.

Interest rates
NIBOR (%)                         LIBOR (%)

O/N              11.1667              USD 1 month         0.1740
7 Day            11.9167              USD 2 month        0.2145
30 Day         12.6667             USD 3 month        0.2431
60 Day         13.0417             USD 6 month        0.3662
90 Day         13.3750             USD 12 month      0.6271
Y/Y Consumer Inflation Aug 2013 :            8.2%
FX Reserves: 9 October 2013 (USD bn)   45.14
MPR                                                                 12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria.

Hi              Low           Close         Prev.Close
    160.85/95   160.30/40   160.65/75    160.25/35

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