A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

07 August 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele has maintained that CBN policies aimed at managing demand for foreign exchange were beginning to have the desired impact. He also dismissed calls for the devaluation of the naira amid growing domestic and international concerns about the tough outlook facing the Nigerian economy after the collapse of oil prices last year. Speaking in an interview, Emefiele said demand management of forex arising from limited supply and the exclusion of certain items from accessing forex from the official market was working, adding however that there was no ban on the importation on the said items. The CBN last month had listed importers of 41 items and barred them from accessing forex from the interbank market, arguing that the products could be produced in the country. Emefiele, in an attempt to shore up the naira and preserve the country’s foreign reserves, argued that the country was exporting jobs by importing items, which ordinarily could be produced locally. However, the decision has been criticised by some analysts and the Lagos Chamber of Commerce and Industry (LCCI), who have contended that the policy was in the near-term inflationary, could negatively impact retail trade and lead to job losses.

FIXED INCOME: Following NGN provision on Tuesday for yesterday’s FX purchases, O/N rates raced north, closing at 50%. Flows in bonds were predominantly sellers by late afternoon with quotes closing a bit more disorderly. Bill market was equally well offered as dealers tried to raise liquidity. Money market long only N83bn with no support till next week Thursday’s OMO maturity. Many eyes on brent which could take us even wider. Average yield on bills now 14.83% and bonds 15.47%.

FX: No significant change in the market as the two way quote FX market remains shut. Special auction funds still maintained at 196.00/197.00.

EUROPE: The UK trade deficit almost doubled in June to £1.6bn, from £885m the previous month, the Office for National Statistics (ONS) has said. A deficit of £9.2bn on goods was partly offset by a £7.6bn surplus on services. Exports fell slightly, reflecting in part weaker demand in the eurozone. Despite the sharp monthly increase, the deficit for the second quarter was, at £4.9bn, considerably smaller than the £7.5bn deficit recorded in the first three months of the year.

COMMODITIES: Prices for the West Texas Intermediate are grinding lower today, as concerns over the global supply glut continue to hurt sentiment. In addition, US output remains on the rise, along with the production of other oil-producers around the globe, collaborating with the downward pressure on prices and capping occasional gains. WTI is down 1.95% at $44.27 with the next support at $44.03 (2015 low Mar.18) followed by $43.83 (monthly low Feb.2009) and then $33.55 (monthly low Jan.2009).

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   9.20%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     31.522

Money Market Highlights
O/N                                  32.7083
30 Days                           16.0437
90 Days                           17.2311
180 Days                         18.3485

USD 1 Month                  0.1915
USD 2 Months               0.2538
USD 3 Months               0.3114
USD 6 Months               0.5091
USD 12 Months             0.8351

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           29-Oct-15          15.04
182d         21-Jan-16         14.95
364d        02-Jun-16         16.40
2yr            27-Apr-17         15.36
3yr            29-Jun-19        15.47
5yr            13-Feb-20        15.41

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         198.75       199.45
EURUSD       1.0829      1.1031
GBPUSD       1.5425       1.5627
USDJPY        124.71       124.74
USDCHF       0.97775    0.9879
GBPEUR       1.4104        1.4308
USDZAR      12.6162      12.8196
JPYNGN      160.3597    160.4603
CHFNGN       204.99      206.68
EURNGN       217.24       219.60
GBPNGN        309.40     310.79
ZARNGN          14.69      16.61

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