A Review of the Nigerian Energy Industry

Financial market products & services update

Currency notes, coins and gold bars.
Currency notes, coins and gold bars.

23 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The CBN says any exporter that uses export proceeds for non-eligible transactions will be barred from the foreign exchange market.

In a circular on its website on Sunday, the CBN’s Director, Trade and Exchange Department, Mr. Olakanmi Gbadamosi, said it had become imperative to clarify the term “unfettered access”. as contained in the FX manual, following different interpretations of the provisions.

He said, “For the avoidance of doubt, all authorised dealers and the general public are to note that, henceforth, the term ‘unfettered access’ granted to holders of export proceeds domiciliary accounts shall be strictly construed to mean that the proceeds of exports in the account can only be used by the exporters to finance eligible and other trade-related transactions supported with appropriate documentation.”

FX: Interbank market has remained quite illiquid due to the daily special auction with very scanty bilateral activities. Traded range has been somewhat anchored around the daily advised level by CBN – week’s interbank traded range being 196.00-203.50. CBN’s intervention closed between 197.00 and 199.00. Market is likely to continue to remain relatively illiquid with few bilateral Trades and the recent dip in traded volumes is expected to persist as long as the special intervention window remains open.

FIXED INCOME: Bond market opened on a slightly bearish note on Friday. The short end was initially sold off but Aug 2016s closed -8bps and 2017s +17bps. Demand from the PFAs was seen on the Aug 2016s, April 2017s and June 2019s. T-bill market was largely quiet last Friday. New one year bill (18 Feb 2016) from Wednesday’s auction free to trade from Monday 23rd Feb. Average yields on bonds 16.05% and T-bills 14.87%.

U.S: Chair Janet Yellen testifies before Congress this week with the Federal Reserve facing its gravest political threat since the drafters of the Dodd-Frank act tried to strip it of its supervisory powers.

Lawmakers from both parties are demanding greater transparency and accountability from an institution that has the power to impose capital requirements for banks and influence how much Americans pay for a mortgage or an auto loan.

EUROPE: The euro’s resilience amid political brinkmanship over Greece shows how the currency union is better insulated against shocks than five years ago.

Even before euro-region leaders reached a provisional deal on extending the nation’s bailout on Feb. 20, the 19-nation currency was headed for its best month since November against a basket of its major peers.

COMMODITIES: Oil traded near $60 a barrel in London after the first weekly decline in a month as Libya restarted a crude pipeline after a fire and Oman said it will increase production by as much as possible.

Futures swung between gains and losses after a 2.1% drop last week. Oil fields in eastern Libya resumed pumping to Hariga port after a pipeline was repaired, according to state- run National Oil Corp.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                 8.20%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     323062

Money Market Highlights
O/N                                  26.3750
30 Days                           15.3078
90 Days                           16.2369
180 Days                         17.1866

USD 1 Month                0.1715
USD 2 Months              0.2108
USD 3 Months              0.2626
USD 6 Months              0.3857
USD 12 Months            0.6744

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           21-May-15         14.88
182d         13-Aug-15         14.33
364d         04-Feb-16        16.16
2yr            27-Apr-17         16.76
3yr            31-Aug-17         16.79
5yr            13-Feb-20         16.25

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         195.50      199.50
EURUSD      1.1257       1.1459
GBPUSD       1.5283      1.5485
USDJPY        119.22       119.25
USDCHF      0.94155    0.9517
GBPEUR      1.3444       1.3648
USDZAR      11.5979      11.8013
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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