A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

13 April 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria’s central bank plans to lower limits on how much money people can withdraw from their local currency accounts when they go abroad as it battles market speculation against the naira. “It’s all this speculation,” Sarah Alade, a deputy governor at the central bank based in the capital, Abuja, said by phone on Friday. The measure may be implemented “very soon,” she said. Naira account holders can currently withdraw as much as $150,000 abroad each year, Ibrahim Mu’azu, a spokesman for the central bank, said in a separate phone interview from Abuja. The new limit will not apply to foreign-exchange accounts, Alade said. Last month, Central Bank of Nigeria Governor Godwin Emefiele said the regulator won’t introduce capital controls.

FX: Another decent sale on Friday from the CBN that cleared some outstanding demand. Intervention rate maintained at $/NGN 197.00. This is expected to continue this week.

FIXED INCOME: Firm tone to close in bond trading as we saw some resistance at 15% handle on Friday. April 2017s traded above 15% and we saw some demand for it causing a ripple effect especially on the long end of the curve.

We expect the bond market to trade a bit heavy ahead of the bond auction this week.

MARKET MONEY: Money market continues to be tight opening NGN145bn long Friday last week. Yields inched higher on T-bills on the back of it with 27% traded for O/N.

INDIA: A gauge of expected swings in India’s rupee fell toward a four-month low on speculation the central bank will keep intervening to maintain stability in the currency.

Bank of America Merrill Lynch predicts the monetary authority will buy $62.5 billion in the next 12 months to keep the rupee competitive, economist Indranil Sen Gupta said in an April 9 interview. The nation’s foreign-exchange reserves have climbed to a record $343 billion, according to Reserve Bank of India data. The rupee has gained 1.1% this year, the second-best performance in Asia after the Taiwan dollar.

USA: Investors speculating the dollar rally is fizzling out may be overlooking trillions of reasons why it will keep on going.

There’s pent-up demand for the U.S. currency that will underpin years of appreciation because the world is “structurally short” the dollar, according to investor and former International Monetary Fund economist Stephen Jen. Sovereign and corporate borrowers outside America owe a record $9 trillion in the U.S. currency, much of which will need repaying in coming years, data from the Bank for International Settlements show.

COMMODITIES: China’s record pace of crude imports is easing as its refiners fill commercial stockpiles and new tanks for holding emergency supplies remain under construction.

Overseas crude purchases totaled 26.81 million metric tons in March, data released on the website of the General Administration of Customs in Beijing showed on Monday. That’s equivalent to 6.34 million barrels a day, down 5.2% from February and the slowest pace since November.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   8.40%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     29.589

Money Market Highlights
O/N                                  27.1667
30 Days                           15.590
90 Days                           16.8006
180 Days                         17.6867

USD 1 Month                 0.1785
USD 2 Months               0.2285
USD 3 Months               0.2770
USD 6 Months               0.4044
USD 12 Months             0.6984

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           02-Jul-15          14.07
182d         01-Oct-15          14.87
364d        24-Mar-16         15.53
2yr            27-Apr-17          14.85
3yr            29-Jun-19         14.88
5yr            13-Feb-20         14.86

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         198.70       199.40
EURUSD      1.o510        1.0712
GBPUSD       1.4517        1.4719
USDJPY        120.35       120.38
USDCHF       0.97365    0.9838
GBPEUR       1.3675       1.9838
USDZAR      11.9528     12.1562
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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