A Review of the Nigerian Energy Industry

Financial market update

Financial-markets24 February 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Acting Governor of the Central Bank of Nigeria (CBN), Dr Sarah Alade has reassured Nigerians and the international community that the CBN has no plan to devalue the currency. Dr Alade pledged that the bank under her watch would be committed to sustaining the achievements already attained through the use of appropriate monetary policy tools to ensure price and financial system stability.

BONDS: Markets opened a touch softer on Friday following the suspension of Governor Sanusi Lamido. Market Rally started by mid-day and we saw yields stabilize; closing at 13.73% (average), up 60bps across the curve from Wednesday when the interbank market last traded. There were no significant flows from offshore investors.

BILLS: Yields on Treasury Bills closed at 13.81% on Friday. 20 FEB bills matured Thursday. The new treasury bills from Wednesday’s auction not yet trading in the secondary market. No sale was made at Friday’s OMO auction on the 111-day bill.

MONEY MARKET: OBB and ON rates both closed at 10.50%.

FX: Naira’s volatility remained unabated as market’s reaction to Sanusi’s suspension worsened the depreciating pressure on the local unit on Friday. The USDNGN opened to a bullish run and depreciated intraday to a high on the 167 levels. Supply of USD from the CBN helped the Naira to appreciate to the 163 levels, however strong demand ensured rates retraced to close at Naira’s worst close this year at 165 levels.

COMMODITIES: West Texas Intermediate crude rose from the lowest price in a week amid speculation that cold weather in the U.S. will boost demand for heating in the world’s biggest oil consumer. WTI for April delivery rose as much as 50 cents to $102.70 a barrel in electronic trading on the New York Mercantile Exchange

EU: Euro zone inflation due on Friday will be firmly in the sights of financial markets eager to establish whether the European Central Bank, ECB, has enough ammunition to ease monetary policy in the following week. Inflation in the 18-member euro zone unexpectedly slowed to 0.7 percent year-on-year in January, matching a four-year low set last October and confounding expectations for a rise to 0.9 percent. The ECB cut its main refinancing rate to a record low of 0.25 percent in November and left it at that level at its meeting earlier this month, but put markets on alert for a possible move in March.

CHINA: China is confident of maintaining around the same pace of growth in foreign trade this year as last year, the Ministry of Commerce has said. Shen Danyang, the spokesman for the ministry, also noted that exports may see some fluctuation in the first quarter of this year due to seasonal factors. China’s exports grew 7.9 percent for all of 2013 compared with the previous year, while imports rose 7.3 percent, missing an official 8 percent growth target.

Macro Economic Indicators
Inflation rate (yoy) for Jan. 2014      8%
Monetary Policy Rate current           12%
FX Reserves (Bn $) as at Feb. 19     41.302

Money Market Highlights

O/N                           11.0833
7 Day                         11.4583
30 Day                      11.7083
60 Day                      12.0417
90 Day                      12.2917
USD 1 Month          0.1555
USD 2 Months        0.1956
USD 3 Months        0.2349
USD 6 Months        0.3305
USD 12 Months      0.5553

Benchmark Yields
Tenor          Maturity              Yield (%)

91 days         29-May-14             13.18
182 days       04-Sep-14             13.47
364 days       05-Feb-15             14.22
2 years          23-Apr-15             13.47
4 years          31-Aug-17             13.33
5 years          30-May-18           13.34

Indicative Currency Exchange Rates
                             Bid         Offer
EURUSD         1.3736      1.3786
GBPUSD          1.6643      1.6693
USDJPY           102.31      102.71
USDCHF          0.8874     0.8904
GBPEUR          1.2116       1.2126
USDZAR          10.90        11.05
USDNGN         165.05      165.35
JPYNGN          1.6132      1.6632
CHFNGN        185.99      189.99
EURNGN        226.71      230.71
GBPNGN        274.69      278.69
ZARNGN       15.14           17.14

                                  Hi             Low            Close       Prev.Close
USD/NGN   166.65/75   163.90/00   165.55/75   163.00/10

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