A Review of the Nigerian Energy Industry

Financial market products & services update

Currency, Investment analysis and a compass.
Currency, Investment analysis and a compass.

08 January 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Against the belief that the federal government has plundered and almost emptied the foreign reserves, data gathered from the Central Bank of Nigeria website on Wednesday showed that the foreign reserves have increased slightly to $34.513 billion in the first six days of 2015. The current value of the reserves represents an increase by $44 million, compared with the $34.495 billion it stood as at December 30, 2014. The reserves had depreciated by $9.010 billion in 2014. The central bank relies heavily on the external reserves to support the naira which came under intense pressure as a result of the falling crude oil prices. Oil prices have fallen by over 50 per cent since the second half of last year. The significant drop in the reserves had been attributed to the increasing appetite for forex despite the dwindling supply of the United States dollars in the country.

FX: Central Bank sold 450 mio at yesterday’s RDAS, despite advise of offering just $200 mio. Marginal rate was maintained and not much changed in the interbank market. More oil flow in the market ensured the pair stayed within the same band we’ve seen lately. There are whispers of sales by the state owned oil company in the next few days which could see us testing much lower in next few days as market remain strictly flow driven

FIXED INCOME: Weak open on bonds yesterday led by April 2017s after the Q1 auction calendar was released. Also, a new five year bond to be issued in February. Tbill trading was quiet by midday as street awaited the auction results but decent demand for 22 Jan 15 bills with money market up NGN522bn approximately. Auction prints at 11.52%, 15.51% and 17.64% yields respectively. All in all, it was a relatively quiet trading day..

USA: U.S. stocks climbed after the worst start to a year since 2008 as data stoked optimism on growth. Oil pared gains, while European stocks rose and the euro tumbled as the threat of deflation bolstered the case for stimulus.

The Standard & Poor’s 500 Index increased 0.7 percent at 10:53 a.m. in New York, halting its worst losing streak in 13 months. Energy shares rose 0.5 percent after a two-day slide of 5.3 percent. West Texas Intermediate crude pared an earlier gain to trade near an April 2009 low. The Stoxx Europe 600 Index advanced 0.7 percent. The yield on 10-year Treasuries added five basis points to 1.99 percent.

CHINA: China’s benchmark money-market rate fell to a three-week low as cash supply improved in the interbank market following year-end regulatory checks.

The seven-day repurchase rate, a gauge of interbank funding availability, fell 13 basis points to 3.84 percent as of 4:35 p.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. It has dropped 112 basis points in a four-day declining streak and touched 3.83 percent earlier today, the lowest since Dec. 17

COMMODITIES: Brent crude, the international benchmark, fell as low as $49.66 a barrel yesterday, dropping below $50 for first time since 2009. Prices dropped 48 percent in 2014 after three years of the highest average prices in history. West Texas Intermediate, the U.S. benchmark, plunged to as low as $46.83 today, about a 56 percent decline from its June high


Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                     7.90%
Monetary Policy Rate current                            13.00%
FX Reserve (Bn $) as at December 31 2014    34.513

Money Market Highlights
O/N                                 11.1867
30 Days                          14.0591
90 Days                          14.6320
180 Days                        15.6408

USD 1 Month                 0.1665
USD 2 Months               0.2148
USD 3 Months               0.2521
USD 6 Months               0.3613
USD 12 Months             0.6273

Benchmark Yields
Tenor    Maturity    Yield (%)
91d          09-Apr-15       11.41
182d        25-Jun-15       14.40
364d        17-Dec-15       16.33
2yr           16-Aug-16       15.23
3yr           27-Apr-17        15.36
5yr           29-June-19     15.30

Indicative Currency Exchange Rates
                                Bid          Offer
USDNG                180.00        186.00
EURUSD             1.1707          1.1909
GBPUSD              1.4936         1.5138
USDJPY               119.79          119.82
USDCHF             1.00125        1.0223
GBPEUR             1.2633          1.2837
USDZAR             11.5421         11.7455
JPYNGN                 N/A             N/A
CHFNGN                N/A             N/A
EURNGN                N/A             N/A
GBPNGN                N/A              N/A
ZARNGN                N/A              N/A

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