03 November 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Oil Price Crash Compels Nigeria, others to revise fiscal terms.
A new report by Wood Mackenzie has stated that the slump in the price of crude oil has accelerated the need for Nigeria and other sub-Saharan African countries to carry out a review of fiscal terms, as they prepare to adjust to significant reductions in tax revenue.
According to Wood Mackenzie, the percentage of government share in hydrocarbon profits across sub -Saharan African countries (onshore 66.1%; shelf 60.5%; deepwater 61.6%) is higher than the global average (onshore 57.6%; shelf 58.3%; deepwater 57.8%) despite the challenges companies face operating in the region.
FIXED INCOME: Market opened this week with a strong tone riding on the back of FAAC inflows, CRR credit and FX refund boosting System liquidity. Market sentiment is expected to remain bullish until the liquidity in the system washes away.
FX: The CBN quoted the special auction rate at 196.98 yesterday. Gross FX reserves on a 30 day moving average now at $30.192bn (30th Oct 2015) from $30.37 as at 30 Sept 2015.
MONEY MARKETS: Money market long NGN 901 bn with Overnight rates opening at 1%.
COMMODITIES: Oil traded near $46 a barrel before U.S. government data forecast to show crude stockpiles expanded in the world’s biggest consumer.
Futures were little changed in New York after falling 1% Monday. Inventories probably rose for a sixth week, a Bloomberg survey shows before an Energy Information Administration report Wednesday. Oil is near a bottom and global supplies look set to close their gap with demand amid declining output, according to Daniel Yergin, vice chairman at IHS Inc.
Oil has slumped more than 40% the past year amid speculation a global glut will be prolonged. The Organization of Petroleum Exporting Countries continues to pump above its collective quota while stockpiles in the U.S. remain more than 100 million barrels higher than the five-year seasonal average.
CHINA: China will seek to increase the Yuan’s convertibility by 2020, as the government released draft proposals of its development plan for the next five years.
The country will further open the finance industry as it promotes the Yuan’s inclusion in the International Monetary Fund’s basket of reserve currencies, the official Xinhua News Agency said, citing the Communist Party’s proposed development plan for the next five years. The plan also calls for advancing reforms of stocks and bonds issuance and speeding up the overhaul of the financial and taxation systems.
President Xi Jinping is nudging the economy toward a greater reliance on consumption and services and trying to rein in debt and investment without triggering a slump.
E.U. The specter of more stimulus from the European Central Bank risks triggering a policy reversal in Denmark, forcing it to resume currency purchases in defense of its exchange-rate regime, according to Danske Bank.
President Mario Draghi’s Oct. 22 message that the ECB is ready to ease policy further is proving a game-changer for central banks outside the euro zone.
For AAA-rated Denmark, which pegs its Krone to the Euro, that means efforts to exit a period of extreme monetary stimulus are being confounded. Arne Lohmann Rasmussen, chief analyst at Danske, says Denmark may be dumping kroner on the market as soon as next month to defend the peg. What’s more, the Danish rate increase that some economists had seen coming this year is now totally off the radar, Rasmussen said.
Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014 9.40%
Monetary Policy Rate current 13.00%
FX Reserve (Bn $) as at January 09 2015 30.192
Money Market Highlights
30 Days 13.4778 90 Days 15.5239
180 Days 17.4839
USD 1 Month 0.1920
USD 2 Months 0.2530
USD 3 Months 0.3341
USD 6 Months 0.5516 USD 12 Months 0.8684
Tenor Maturity Yield (%)
91d 28-Jan-16 06.32
182d 28-Apr-16 09.72
364d 20-Oct-16 10.71
2yr 31-Aug-17 12.27
3yr 30-May-18 12.35
5yr 13-Feb-20 12.70
Indicative Currency Exchange Rates
USDNG 197.40 199.48
EURUSD 1.0913 1.1115
GBPUSD 1.5319 1.5521
USDJPY 120.70 120.71
USDCHF 0.98235 0.9924
GBPEUR 1.3902 1.4108
USDZAR 13.6932 13.8666
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