A Review of the Nigerian Energy Industry

Financial market update

Financial-market29 October 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Central Bank of Nigeria doesn’t have any plans to cut its benchmark interest rate from a record high as it pushes to keep inflation under control, Governor Lamido Sanusi said. Sanusi stated that he does not think the country is where he can say it has sustained price stability. The bank has kept the policy rate at 12 percent since November 2011 to bolster the currency in Africa’s largest oil producer. That’s helping to curb inflation, which Sanusi said on Oct. 7 will probably ease to below 8 percent by December.

BONDS: Quiet session yesterday with few trades feeding through. We closed the day flat at opening levels.

BILLS: Taking a cue from last week’s close, yields inched higher again yesterday across the mid to longer end. This hike was easily offset by moves in the shorter end (maturities less than 2 months) as demand for these illiquid dates squeezed yields lower. We ended the day 2bps lower than open on average with a steepened curve.

MONEY MARKET: OBB and ON rates remained unchanged at 10.25% and 10.50% respectively.

CBN RDAS AUCTION: CBN offered $400 million and sold $399.6 million. Marginal rate was N156.05/US$ (excluding CBN 1% Commission). 21 banks bid.

US: The dollar inched up on Tuesday, but stayed near a nine-month trough as investors bet the Federal Reserve this week will set the course for its massive stimulus programme to be maintained into early next year. The dollar index edged up slightly to 79.388. However, it remained not far off Friday’s 78.998 – a low that hadn’t been seen since February 1. A break there could pave the way for a test of this year’s trough of 78.918 and then the September 2012 low 78.601. Traders said the market lacked conviction and moves were driven more by flows and position adjustments ahead of the Fed policy meeting on Tuesday and Wednesday than by Fundamentals.

EUROPE: The European Commission will take an extra month to decide on rules affecting how banks calculate their capital ratios after Scandinavia criticized existing plans that the region argues would unduly penalize its banks. The decision to delay follows an outcry from bankers associations in Denmark, Sweden, Norway and Finland, who say a European Banking Authority proposed reporting requirement for capital buffers would overstate the risks associated with their mortgage assets. The commission had been due to decide on the EBA’s proposal this month.

CHINA: China’s money-market rates climbed to the highest levels since July and stocks declined as the central bank’s first injection of funds in two weeks failed to alleviate a cash squeeze. The People’s Bank of China conducted 13 billion yuan ($2.13 billion) of seven-day reverse-repurchase agreements today, according to a statement on its website. That compares with the 102.5 billion yuan drained from the banking system in the last two weeks as existing contracts matured and the monetary authority suspended sales of new agreements as corporate tax payments fell due.

COMMODITIES: WTI fell from the highest level in a week before U.S. government data forecast to show crude inventories rose to the most in four months in the country, the world’s biggest oil consumer. WTI for December delivery slid as much as 46 cents to $98.22 a barrel in electronic trading on the New York Mercantile Exchange and was $98.47.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD       1.3782       1.3832
GBPUSD       1.6104       1.6154
USDJPY         97.53         97.93
USDCHF       0.8950     0.8980
GBPEUR       1.1685       1.1695
USDZAR       9.8025      9.9525
USDNGN      158.20      158.50
JPYNGN        1.6221      1.6721
CHFNGN      176.76      180.76
EURNGN      218.03     222.03
GBPNGN      254.77      258.77
ZARNGN        16.14        18.14

Commodities
WTI fell from the highest level in a week before U.S. government data forecast to show crude inventories rose to the most in four months in the country, the world’s biggest oil consumer. WTI for December delivery slid as much as 46 cents to $98.22 a barrel in electronic trading on the New York Mercantile Exchange and was $98.47.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N              10.5417       USD 1 month        0.1681
7 Day            11.0000      USD 2 month       0.2084
30 Day         11.6250       USD 3 month       0.2359
60 Day         12.0000     USD 6 month       0.3538
90 Day         12.3750      USD 12 month      0.6056
Y/Y Consumer Inflation September 2013 : 8.0%
FX Reserves: 24 October 2013 (USD bn)  45.145
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
    158.75/85   158.20/30   158.58/68   158.65/75

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