A Review of the Nigerian Energy Industry

Financial market products & services update

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

28 May 2015, Sweetcrude, Houston – local and international financial market products and services update.
NIGERIA: Nigeria’s total external merchandise trade decreased by N110.2 billion to N4.87 trillion in the first quarter of the year (Q1 2015) compared to N4.98 trillion in the previous quarter, according to the National Bureau of Statistics (NBS). The bureau explained that the 2.2 percent drop occurred despite a rise of N275.6 billion or 9.3 percent in the value of exports compared to the preceding quarter. The country’s structure of exports was dominated by crude oil, which accounted for an estimated N2.25 trillion or 69.7 percent of the value of total exports in the period under review. The statistical agency said a decline of N385.8 billion or 19 per cent in the value of imports resulted in an overall decline in the value of merchandise trade. According to the Foreign Trade Statistics for the first quarter of 2015 which was released yesterday, the rise in exports and decline in imports however, improved the country’s trade balance which increased by 71.6 percent from the preceding quarter to N1.5 trillion.
FX: Intervention rate was maintained at $/NGN 197.00.

FIXED INCOME: Yields in bond market increased as demand continues to wane. June 2019s, Jan 2022s and July 2034s now on 14% handle. Some selling by a client on the July 2034s but the selling on the rest of the bond curve seems to be street driven. Bill market was well bid since there was no OMO auction yesterday. Average yield on bills 27bps tighter from Tuesday and demand will persist in the absence of OMO to give some support. O/N rates closed at 10% with money market still long NGN311bn.

COMMODITIES: WTI oil futures extends its recovery in the European morning largely on the back of a pause in the recent US dollar rally, however, the gains were capped amid rising supply worries ahead of EIA weekly stockpiles report. Currently, WTI trades 0.43% higher at 57.75, recovering from fresh five week lows of 57.38 Oil prices extended its overnight gains as the greenback took a breather, but gains were limited on fears over the supply glut, as US crude stockpiles rose despite market expectations for another decline.

EUROPE: UK car production fell in April after a rise in vehicle output for the domestic market failed to offset a drop in exports. Production in April was 3.8% lower than last year, according to the Society of Motor Manufacturers and Traders (SMMT). The number of cars produced for the domestic market increased by 11.1% to 29,930. However, those intended for export, which represents a much larger portion of the market, fell 7.6% to 98,382.

CHINA: The International Monetary Fund predicts that the Chinese economy will grow at about 6.8 percent this year, largely in line with the Chinese government’s growth target of around 7 percent. The IMF’s first deputy managing director — David Lipton — said that China is transitioning to a new normal and its currency is no longer undervalued. “We see that as resulting from process of where the economy is slowing somewhere. The government is allowing some of the vulnerabilities. We think 6.8 percent is consistent with the government’s idea that growth is around 7%. We think it is appropriate,” said David Lipton, first deputy managing director of IMF.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   8.70%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     29.641

Money Market Highlights
O/N                                  9.6433
30 Days                           15.0824
90 Days                           16.2018
180 Days                         17.4152

USD 1 Month                 0.1854
USD 2 Months               0.2307
USD 3 Months               0.2835
USD 6 Months               0.4231
USD 12 Months             0.7526

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           27-Aug-15         11.77
182d         03-Dec-15        13.82
364d        05-May-16        14.57
2yr            27-Apr-17         13.86
3yr            29-Jun-19        14.07
5yr            13-Feb-20        14.06

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         196.00      199.50
EURUSD      1.0823       1.1025
GBPUSD       1.5242       1.5444
USDJPY        123.93       123.96
USDCHF       0.94245   0.9526
GBPEUR       1.3955      1.4159
USDZAR      11.9475     12.1509
JPYNGN      160.4597  160.5603
CHFNGN       212.59      214.28
EURNGN       221.59      222.95
GBPNGN        309.16     310.55
ZARNGN          15.90        17.83

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