A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.
*Financial markets.

05 October 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria will keep foreign currency restrictions for now to preserve the country’s currency reserves amid falling oil revenues but the Central Bank of Nigeria will ease the rules in the long-term, Vice President Yemi Osinbajo has said.
The current “restrictions are definitely short term. There is no question about that,” Reuters quoted Osinbajo as telling reporters late on Saturday.
“So, long term, we expect that the CBN will ease restrictions as we go along.” He added.
The CBN Governor, Mr. Godwin Emefiele, had defended its decision to tighten foreign exchange controls by excluding 41 items from the interbank forex market a few months ago.

FX: Post MPC and no significant change in the market as the two way quote FX market remains shut. The special auction funds maintained at 195.95/196.95 on Friday.

FIXED INCOME: In line with expectations last week Friday, trading in the T-bills space witnessed some gains with yields declining 15bps on average on the back of robust system liquidity as there was still no OMO auction on Friday. In bonds, a recovery rally was seen but the market was quiet for the better part of the Friday. T-bill auction this week, on offer is N25.4bn 91day, N33.5bn 182day and N68.8bn 364day paper. O/N rates closed at 5% on Friday.

U.S: More and more, bond traders are drawing the same conclusion: central bankers globally are coming up short in their attempts to combat the world’s economic woes.
Even after hundreds of interest-rate cuts and trillions of dollars in quantitative easing, the bond market’s outlook for inflation worldwide is approaching lows last seen during the financial crisis. In the U.S., Europe, U.K., and Japan, those expectations are now weaker than they were before their respective central banks began their last rounds of bond buying.
That’s leading investors to write off the Federal Reserve’s chances of raising interest rates this year and increase their bets that it will tighten less than policy makers forecast in the years to come.

CHINA: Developing East Asian economies are feeling the weight of China’s growth slowdown, with the World Bank cutting the region’s growth forecasts through 2017.
China’s growth will cool to 6.9% in 2015, slower than the 7.1% rate predicted in April, the World Bank said in its East Asia and Pacific Economic Update released Monday. Expansion will ease to 6.7% next year and 6.5% in 2017, it said. Developing East Asia will expand 6.5% this year, slower than the 6.7% predicted in April. Slower-than-expected growth in China will put pressure on commodity exporters, as well as trade, foreign direct investment and tourism in the region, the World Bank said.

COMMODITIES: Hedge funds trimmed bullish oil bets for the first time in six weeks, losing faith in a swift recovery as Russia boosted output to the highest since the Soviet Union collapsed.
Speculators reduced their net-long position in West Texas Intermediate crude by 9.1% in the week ended Sept. 29, according to data from the Commodity Futures Trading Commission. Longs dropped from a 12-week high while shorts increased.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   9.30%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     30.343

Money Market Highlights
O/N                                   5.0000
30 Days                           14.5656                                                                                                                            90 Days                          15.7347
180 Days                         16.8788

USD 1 Month                 0.1947
USD 2 Months               0.2604
USD 3 Months               0.3271
USD 6 Months               0.5345                                                                                                                      USD 12 Months            0.8521

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           07-Jan-16          11.18
182d         07-Apr-16         13.25
364d         01-Sep-16          14.11
2yr            27-Aug-17          14.70
3yr            29-Jun-18         14.79
5yr            13-Feb-20         14.90

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         197.00       199.50
EURUSD       1.1148        1.1350
GBPUSD       1.5084        1.5286
USDJPY        120.17        120.20
USDCHF       0.96615     0.9763
GBPEUR       1.3397        1.3601
USDZAR      13.5396       13.7330
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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