Financial market products & services update

Financial markets

Financial markets

15 December 2014, Sweetcrude, Houston – Local and international financial market products and services update.
FX: NGN has been flow driven over the last few days primarily due to LHS flows from corporate and government related agencies as well as direct daily interventions by the CB which seem committed to ensuring the currency closes the year sub 180.00 despite bony light trading at $64.39pb, just shy of earlier announced 2015 budget benchmark of $65pb. Market continues however to bet on the CB yielding to a further depreciation of the currency mostly due to outlook on oil and perceived/expected continued exit from offshore investors. Friday saw a high of N182.13 and a low/close of N178.50

FIXED INCOME: We were up again average +16bps from Thursday across the entire curve. Brent headlines continue to be bad and the Treasury Bills market remained quite illiquid.

Money market liquidity still thin (just up about NGN30bn) with overnight rates closing at 20% handle. This week will be auction dominated – Treasury bills and bonds auction on the same day, the 17th of December.

NIGERIA: The November headline inflation closed 20bp lower than its previous month to close at 7.90% from 8.10% in October. Food price inflation falls to 9.10% in November from a 9.30% in October. Index rises 0.59% month-on-month in November versus 0.51% in October.

COMMODITIES: Oil traded near a five-year low as the United Arab Emirates said the Organization of Petroleum Exporting Countries will refrain from cutting output even if prices slumped to $40 a barrel.

Brent futures fluctuated in London after falling 2.9 percent on Dec. 12 to cap a third weekly drop. The market will stabilize itself and OPEC will wait at least three months before considering an emergency meeting, U.A.E. Energy Minister Suhail Al-Mazrouei said. The International Energy Agency lowered its2015 demand forecast for the fourth time in five months amid rising supply from non-OPEC countries.

EU: The battle over whether to start quantitative easing in the euro region is all but won, economists say. More than 90 percent of respondents in Bloomberg’s monthly survey predict the European Central Bank will begin large-scale buying of government bonds next year, up from 57 percent last month. An announcement will most likely come in the first quarter, with any decision taken against the objections of some policy makers, the poll of 55 economists showed.

CHINA: Hong Kong’s leader declared the end of pro- democracy protests that blocked the city’s roads for more than 11 weeks, as police cleared the last demonstration site.

Cars and trams returned to areas of the popular Causeway Bay shopping district that had been taken over by protesters, after police officers dismantled barricades and took down tents.

Macro Economic Indicators
Inflation rate (YoY) for Oct., 2014                     7.90%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at December 15 2014   35.813

Money Market Highlights
O/N                                         25.3767
30 Days                                  17.1004
90 Days                                  17.2844
180 Days                                17.5336

USD 1 Month                         0.1610
USD 2 Months                       0.2090
USD 3 Months                       0.2429
USD 6 Months                       0.3409
USD 12 Months                     0.6013

Benchmark Yields
Tenor          Maturity          Yield (%)
91d                 12-Mar-15           15.10
182d               14-May-15          12.87
364d               03-Dec-15          15.29
2yr                  16-Aug-16           14.60
3yr                  27-Apr-17           14.42
5yr                  29-June-19        14.32

Indicative Currency Exchange Rates
                              Bid            Offer
USDNG             179.67           180.37
EURUSD          1.2336           1.2538
GBPUSD          1.5622           1.5824
USDJPY           118.42           118.45
USDCHF          0.96085       0.9710
GBPEUR          1.2539           1.2743
USDZAR          11.4667         11.6701
JPYNGN          151.9697       152.0703
CHFNGN        185.51            187.20
EURNGN        223.18           224.54
GBPNGN        282.21           283.61
ZARNGN          14.60             16.52

About the Author