Financial market products & services update

Financial markets17 June 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The National Bureau of Statistics (NBS) on Monday said inflation rose to 8 per cent in May, over the level a year ago, slightly above the 7.9 per cent recorded in April 2014. This is the third consecutive rise in inflation data since March, a situation analysts say is a gradual build up to the crucial and fast approaching 2015 elections in the country, and another evidence of upward pressure on prices.

FX: Slight gains for NGN yesterday, as we saw a significant boost in USD liquidity in the market inclusive of about $37 mio sales by an oil major. Market gapped at open trading 163.50/60 few minutes into trading from a 163.15/25 open, with NGN eventually capped intraday at 163.65/75 before news of the oil major selling stirred a reversal in sentiments pushing rates down to initially settle within 163.10-163.30 range. Market was further offered towards close, with rates trading a 162.55/65 low and closing a tad higher at 162.60/70.

FIXED INCOME: Street remained even more quiet on Monday with dynamics similar to last week. Inflation prints largely in line with market expectations so not enough to spur activity in the markets. The trend in the markets reflected caution ahead of the Wednesday’s PMA but we cannot rule out the fact that traders might have been focusing more on the first Nigerian game in the ongoing world cup (Nigeria vs Iran) coming up late PM yesterday. We remain upbeat about the PMA auction on Wednesday as the monthly statutory allocations (typically in the region of NGN300-350bn) and maturing OMO bills of approximately NGN200bn should make the auction well bid.

COMMODITIES: West Texas Intermediate fell as a technical indicator shows last week’s increase to the highest price in nine months was excessive. WTI for July delivery fell as much as 46 cents to $106.44 a barrel in electronic trading on the New York Mercantile Exchange and was at $106.58 at 4:55 p.m. Sydney time.

EUROPE: Germany and France are seeking to ease the euro area’s deficit rules to reflect efforts by governments to fix their economies, German Economy Minister Sigmar Gabriel said. Europe’s two biggest economies will present a proposal to the next European Commission to allow countries such as France and Italy to subtract the cost of economic reforms from the budget deficit, Gabriel told reporters after meeting French Economy Minister Arnaud Montebourg in Toulouse, France, yesterday. Austerity has “failed,” he said.

CHINA: China’s stocks fell, dragging the benchmark index down by the most in about a month, after foreign direct investment in the country unexpectedly declined. The Shanghai Composite Index slumped 0.9 percent to 2,066.70 at the close. The gauge reached its highest level since April 18 yesterday as the central bank extended a reserve- requirement cut to more lenders and retail sales picked up in May, offsetting concern that declining home prices will hurt economic growth.

Macro economic Indicators
Inflation rate (Y-o-Y) for May. 2014       8.00%
Monetary Policy Rate current                  12.00%
FX Reserves (Bn $) as at June 13            37.036

Money Market Highlights

O/N                               10.9167
30 Day                          12.4065
90 Day                          13.5413
180 Day                        14.4285
USD 1 Month               0.1540
USD 2 Months             0.1953
USD 3 Months             0.2306
USD 6 Months             0.3261
USD 12 Months           0.5466

Benchmark Yields
Tenor         Maturity        Yield

91d                28-Aug -14        10.46
182d              20-Nov-14         11.00
364d              07-May-15         11.16
2y                   16-Aug-16          11.55
4y                    31-Aug-17         11.61
5y                    29-Jun-19         11.83

Indicative Currency Exchange Rates
Bid        Offer

EURUSD     1.3558      1.3508
GBPUSD      1.6978     1.6988
USDJPY       102.01     102.41
USDCHF      0.8986   0.9006
GBPEUR       1.2522    1.2532
USDZAR     10.7260  10.8260
USDNGN       162.55    163.30
JPYNGN         1.5935    1.6435
CHFNGN        180.89   184.89
EURNGN        220.39   224.39
GBPNGN         275.98   279.98
ZARNGN           15.15     17.15

Hi             Low         Close        Prev.Close
   163.65/75   162.55/65  162.60/70    162.95/05

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