09 October 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
FX: The special auction funds maintained at 196.00/197.50 yesterday. Gross FX reserves on a 30 day moving average now at $30.238bn from $30.37 as at 30 Sept 2015.
FIXED INCOME: The bullish trend continued in the fixed income market again yesterday. News of possible exclusion from the Barclays EM Bond index had no market impact since this index is not widely tracked. Bond yields came down by an average of 50bp and treasury bills yields 100bp across board. Locals are leading this rally because market liquidity is in excess of NGN1trillion with no OMO in sight. Bid/offer spreads even wider today (average N2 seen in bonds and 200bps on short dated [90days and below] benchmark bills). This trend is likely to continue unabated till if current liquidity level persists. O/N rates closed between 0.5% – 1%.
COMMODITIES: Oil rose above $50 a barrel for a second day and headed for the biggest weekly gain since August amid speculation that an increase in demand will ease a global glut. Crude traded above $50 a barrel Thursday for the first time since July on signs expanding demand will trim the surplus that drove prices to the lowest level in six years. Brent for November settlement gained as much as 95 cents, or 1.8 percent, to $54/bbl.
NIGERIA: Plans by Nigeria, to review offshore production contracts signed with international oil companies two decades ago, have added to uncertainty in an industry already lacking regulatory clarity, said analysts including Philippe de Pontet of Eurasia Group. The objective is to increase Nigeria’s earnings from the fields, according to Emmanuel Kachikwu, GMD of the Nigerian National Petroleum Corp. Yet, declining crude oil prices take away some of the incentive for investments that would’ve given the government more leverage in negotiations. “With Brent below $50 a barrel, the timing is not ripe for big contract negotiations.” de Pontet said. “If the Buhari administration is not careful its agitation for contract review could prove counterproductive at a time when the oil sector is already stagnant at best.”
U.K: Countries can’t count on other economies for growth as trade slows and emerging markets retrench, Bank of England Governor Mark Carney said. “This is a pretty unforgiving environment,” Carney said during a panel discussion Thursday in Lima, where the International Monetary Fund is holding its annual meeting. “Everybody needs to recognize there isn’t going to be a big surge of demand from abroad.” The remarks highlight the tensions facing BOE officials as they weigh domestic strength against global turmoil. Minutes of the Monetary Policy Committee’s October meeting, published Thursday, signalled that a weaker inflation outlook gives room to keep the benchmark rate at a record-low 0.5 percent.
U.S: Many economists still take Federal Reserve policy makers at their word and predict the central bank will raise interest rates this year. Yet, even their confidence was shaken a bit on Thursday after the Fed released the minutes of its most recent policy meeting. “We’re still in the camp of December,” said Thomas Costerg, a senior economist at Standard Chartered Bank in New York. Minutes of the Sept. 16-17 Federal Open Market Committee meeting showed officials were feeling pretty good about the U.S. economy. Yet the solid reading on the domestic economy was darkened by threats from abroad.
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 30.238
Money Market Highlights
30 Days 13.8232 90 Days 15.4731
180 Days 16.9672
USD 1 Month 0.1956
USD 2 Months 0.2484
USD 3 Months 0.3196
USD 6 Months 0.5266 USD 12 Months 0.8409
Tenor Maturity Yield (%)
91d 07-Jan-16 09.31
182d 07-Apr-16 11.44
364d 01-Sep-16 12.06
2yr 27-Aug-17 13.10
3yr 29-Jun-18 13.25
5yr 13-Feb-20 14.40
Indicative Currency Exchange Rates
USDNG 197.00 199.50
EURUSD 1.1223 1.1425
GBPUSD 1.5269 1.5471
USDJPY 120.16 120.19
USDCHF 0.95835 0.9685
GBPEUR 1.3471 1.3675
USDZAR 13.2625 13.4659
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