A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

17 September 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: A pointer to what may transpire at the Monetary Policy Committee (MPC) meeting next week was revealed on Wednesday when a key member of the committee, Dr. Doyin Salami, called on the Central Bank of Nigeria (CBN) to make public its view on its monetary policy dilemma before the end of this year.
Salami stated this while delivering his key note address at the ongoing Standard Bank West Africa investors’ conference, tagged: ‘Nigeria: From Promise to Progress’.
For Nigeria to transit from promise to progress in the immediate short-term, he said among other steps to be taken, the CBN must choose two of the three options before it, which he said, are: fixed exchange rate, maintain monetary independence, and capital mobility.

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. Gross external reserves fell to $30.693 bn as at the 14th of September.

FIXED INCOME: The recent increased bid/offer spreads by the SRO (FMDQ) does not seem to be positive for the fixed income markets, bonds and bills saw some buying interest yesterday but it was not active because of the wide spreads.
Bond auction results showed a managed auction, DMO deciding to sell less than amount on offer to, keep rates in a range. Stop rates were 15.95% for 20s and 15.97% for 34s.

U.S: U.S. equity-index futures dropped and the yen weakened as investors remained split on whether the Federal Reserve will opt to raise interest rates Thursday.
Contracts on the Standard & Poor’s 500 Index slipped after two days of gains, while the Stoxx Europe 600 Index was little changed. The yen’s retreat helped to buoy Asian shares, while the dollar weakened versus the currencies of Malaysia, South Korea and Kazakhstan. Copper rose after a powerful earthquake hit Chile, the No. 1 producer of the metal.

CHINA: Chinese investment into the U.S. will grow strongly regardless of the Federal Reserve’s decision on interest rates, a senior Chinese trade official said. The comments came as the Fed meets to decide whether to raise rates for the first time in nine years and ahead of Chinese President Xi Jinping’s state visit to the U.S. next week.
“As for the impact from a Fed rate hike on China’s economy, we are assessing it, and the initial conclusion is that it will have limited impact on China’s outbound investment, especially China’s direct investment in the U.S.,” said Zhang Xiangchen, China’s deputy international trade representative, at a briefing in Beijing Thursday. “Chinese companies are still enthusiastic about investing in the U.S.” China’s investment in the U.S. rose 35.9% in the first eight months of this year.

COMMODITIES: There’s less than a 50 percent chance that prices will drop to $20 a barrel, most likely when refineries shut in October or March for maintenance, Jeffrey Currie, head of commodities research at the bank, said in an interview in Lake Louise, Alberta. Goldman’s long-term forecast for crude is at $50 a barrel, he said. Goldman cut its crude forecasts earlier this month, saying the global surplus of oil is bigger than it previously thought and that failure to reduce production fast enough may require prices to fall near $20 a barrel to clear the glut. Prices may touch that level when stockpiles are filled to capacity, forcing producers in some areas to cut output, Currie said Wednesday.

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     30.693

Money Market Highlights
O/N                                 48.6250
30 Days                           17.1087
90 Days                           17.1861
180 Days                         17.6106

USD 1 Month                 0.2128
USD 2 Months               0.2765
USD 3 Months               0.3396
USD 6 Months               0.5495
USD 12 Months             0.8665

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           17-Dec-15          11.22
182d         17-Mar-16         14.17
364d         01-Sep-16         16.29
2yr            31-Apr-17         16.01
3yr            30-May-18       15.97
5yr            13-Feb-20        16.00

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         196.00        199.50
EURUSD       1.1223        1.1425
GBPUSD       1.5417         1.5619
USDJPY        120.89        120.92
USDCHF       0.96225     0.9724
GBPEUR       1.3602        1.3806
USDZAR      13.2451       13.4485
JPYNGN      161.8497    161.9503
CHFNGN       204.99      206.68
EURNGN       217.24       219.60
GBPNGN        309.40     310.79
ZARNGN          14.69      16.61

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