29 September 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Federal Government, in a bid to attain robust external reserves, is planning to increase the amount in the Excess Crude Account from the current balance of $2.25bn to $3.95bn next year. It is also targeting fresh private sector investment of $1.5bn (N315.2bn) in infrastructure within the 2016 fiscal period. These figures are contained in the Medium Term Plan 2016-20120 prepared by the National Planning Commission and submitted to Ministries, Departments and Agencies of government for validation. The monetary estimates for the 2016 budget are still being worked out by the respective MDAs and may be ready by mid-November, according to the timeline stipulated in the document. In the document, the government said it would be focusing on six policy thrusts aimed at stimulating growth and reducing the level of poverty in the economy.
FX: Post MPC and no significant change in the market as the two way quote FX market remains shut. The special auction funds still maintained at 196.00/197.00.
FIXED INCOME: With system liquidity now in excess of N400bn from FAAC inflows, O/N rates declined, closing at 5%. Bonds and bills remained well bid yesterday. Short dated paper (80 days and below) is seeing most of the demand. Bonds traded 14.50% area but reversed most gains before close on some profit taking. The average yield on bill now at a year low of 11.99% while bonds are at 14.78%.
U.S.: The Federal Reserve will probably raise interest rates later this year and tighten policy gradually thereafter, New York Fed President William C. Dudley said, echoing the sentiment of Chair Janet Yellen that an uncertain global outlook won’t postpone liftoff into 2016. “The economy is doing pretty well,” Dudley said Monday at an event hosted by the Wall Street Journal in New York. “My expectation is that we probably will raise interest rates later this year.” Dudley said he expected growth in the second half will be a little bit weaker than in the first half, when the U.S. grew around 2.25 percent on an annualized basis. San Francisco Fed President John Williams, speaking later on Monday, made a similar argument. Their remarks line up with Yellen, who said Sept. 24 she felt it likely the Fed would increase rates this year for the first time in almost a decade.
COMMODITIES: Oil traded below $45 as investors await data that may signal the strength of demand in the world’s two biggest consumers. West Texas Intermediate for November delivery was at $44.46 a barrel, up 3 cents, on the New York Mercantile Exchange. Prices fell $1.27 to $44.43 on Monday, the lowest settlement since Sept. 14.
INDIA: India’s central bank has cut its key interest rate for the fourth time this year, and by more than expected. The Reserve Bank of India (RBI) reduced its repo rate to 6.75% from 7.25%, with economists having forecast it would trim rates to 7%. The repo rate is the level at which the central bank lends to commercial banks. The bank has been under pressure to boost growth after inflation hit a record low of 3.6% in August due to falling commodity prices. The latest cut takes interest rates in the country to the lowest level in four and a half years. The RBI had already cut the policy rate by a total of 75 basis points this year, following rate reductions in January, February and June, on the back of low inflation.
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 30.485
Money Market Highlights
30 Days 14.4108 90 Days 15.7014
180 Days 16.7205
USD 1 Month 0.1943
USD 2 Months 0.2598
USD 3 Months 0.3261
USD 6 Months 0.5361 USD 12 Months 0.8609
Tenor Maturity Yield (%)
91d 24-Dec-15 11.21
182d 24-Mar-16 13.68
364d 01-Sep-16 14.08
2yr 31-Apr-17 14.71
3yr 30-May-18 14.60
5yr 13-Feb-20 14.73
Indicative Currency Exchange Rates
USDNG 196.00 199.50
EURUSD 1.1119 1.1321
GBPUSD 1.5089 1.5291
USDJPY 119.97 120.00
USDCHF 0.96675 0.9769
GBPEUR 1.3436 1.3640
USDZAR 13.8809 14.0843
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