A Review of the Nigerian Energy Industry

Financial market products & services update

Currency bills, coins and gold bars.
Currency bills, coins and gold bars.

19 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Consul-General of the People’s Republic of China in Lagos, Mr. Liu Kan, has revealed that the volume of trade between Nigeria and China in 2014 was about $18.1 billion. Mr. Liu Kan disclosed this in Lagos on Wednesday, even as he noted that there was relative increase in the exchange of goods and services in the year over the 2013 transactions.

“Today, Nigeria is China’s third major export destination in Africa after South Africa and Angola, while China is Nigeria’s largest source of imports and third major trade partner.

FX: Yesterday’s highlight was CBN’s press release announcing the closure of the bi-weekly RDAS window with all FX demands to be met in the interbank market. The daily special auction introduced last Friday is to continue with all genuine/eligible demand presented to the CBN at a daily advised rate. CBN has so far met all demand at the special auction window for the past three trading sessions selling an estimated $570 million so far (excluding yesterday’s figure).

FIXED INCOME: Bonds opened wider yesterday following Finance minister’s comments that domestic debt will rise this year as economy borrows to meet shortfall in revenue caused by plunge in the price of oil.

T-bill auction prints with 91d and 182day coming in lower than expectation at 11.05% and 14.70% yield respectively but the 364d largely reflecting the anticipated yield move at 17.99% yield.

CHINA: The recent weakening of the Yuan helps China’s exports even though it makes imports more expensive. This causes pressure on imports, particularly for metals such as copper, iron ore and nickel, which now cost more Chinese companies to bring in.

The Yuan has moved to 6.26 Vs the dollar on Feb 2 from 6.06 in January 2014. Economists call for the Yuan to strengthen to 6.10 in 2016. Easing metals costs.

U.S: The minutes from the Federal Reserve’s meeting last month have foreign-exchange traders wondering whether Janet Yellen has joined the currency wars.

Central bankers from Europe to Australia have engaged this year in bouts of rate-cutting one-upmanship, leaving the U.S. as the only developed nation forecast to raise borrowing costs in 2015. The dollar climbed to its strongest in more than a decade as a result, prompting billionaire Warren Buffett and Goldman Sachs Group Inc. President Gary Cohn to question whether the Fed can now increase rates without damaging the U.S. economy.

COMMODITIES: Oil fell for a second day before U.S. government data forecast to show crude stockpiles in the world’s biggest consumer expanded to a record level. Futures slid as much as 3.7% in New York. Crude supplies probably rose by 3 million barrels to 420.9 million through Feb. 13, according to a Bloomberg News survey before a report Thursday from the Energy Information Administration.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                 8.00%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     32.548

Money Market Highlights
O/N                                  21.8750
30 Days                           15.3283
90 Days                           16.3092
180 Days                         17.1230

USD 1 Month                0.1735
USD 2 Months              0.2145
USD 3 Months              0.2606
USD 6 Months              0.3853
USD 12 Months            0.6841

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           21-May-15        14.73
182d         13-Aug-15         15.01
364d         04-Feb-16        23.25
2yr            27-Apr-17         16.75
3yr            31-Aug-17         16.60
5yr            13-Feb-20         16.33

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         194.00      198.00
EURUSD      1.1314        1.1516
GBPUSD       1.5348      1.5550
USDJPY       118.71        118.74
USDCHF      0.93775    0.9479
GBPEUR      1.3431       1.3635
USDZAR      11.5127     11.7161
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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