25 November 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Nigeria’s central bank took a decision to ease monetary policy, while maintaining currency restrictions. The CBN Monetary Policy Committee reduced the benchmark interest rate by 2 percentage points to 11 percent on Tuesday and lowered the cash reserve ratio to 20 percent to help support an economy striving to cope with falling oil revenue. Emefiele encouraged banks to lend more to sectors with jobs, with the intention that policy stimulates output growth. He however, acknowledged that growth in Credit has so far been mainly due to government demand.
FX: The CB maintained the Special auction rate at 197.00 yesterday.
FIXED INCOME: The market was muted yesterday, MPC decision was anticipated and market players weren’t sure of the outcome.
Bonds sold off a bit because of the uncertainty, Bond yields pushed up to an average of 11.02% from 10.86%. T-bills however had better buyers and the yields dropped 12% to close at an average of 3.91%. O/N remained unchanged. The MPC Decisions are; (MPR drop to 11% from 13%, CRR dropped to 20% from 25%, SDF dropped to 4% from 11%, SLF dropped to 13% from 15%)
Market should rally significantly today because of these decisions and we expect another 150 – 200bps drop in the yields across the curve.
COMMODITIES: Oil traded near $43 a barrel as investors weighed a forecast increase in U.S. stockpiles against heightened geopolitical tension after Turkey shot down a Russian warplane near the border with Syria. West Texas Intermediate for January delivery was at $42.86 a barrel on the New York Mercantile Exchange, down 1 cent, at 7:52 a.m. London time.
EUROPE: The European Central Bank will step up its asset purchases in December to compensate for an almost-two-week pause over the holiday period. Since the 1.1 trillion-euro ($1.2 trillion) quantitative- easing program began in March, the ECB has been ready to adapt the pace of purchases, normally around 60 billion euros per month, to accommodate swings in market activity. The purchases of government bonds, covered bonds and asset-backed securities are intended to help the ECB attain its inflation target of just under 2 percent.
CHINA: Chinese stocks rose to a two-week high as volatility slumped amid growing investor confidence state intervention has stabilized equities. The Shanghai Composite Index climbed 0.9 percent to 3,647.93 at the close, led by technology and gold companies. While price swings in the gauge have fallen to an eight-month low and the number of new investors jumped to a four-month high, turnover slumped with trading volumes 19 percent below the 30- day average on Wednesday. A sense of calm has returned to the stock market as authorities announced the resumption of initial public offerings, scrapped a rule requiring brokerages to hold net long positions and limited leveraged bets. The Shanghai gauge has rebounded 25 percent from its August low, after tumbling 43 percent from its June peak.
Macro Economic Indicators
Inflation rate (Y-o-Y) for October. 2015 9.30%
Monetary Policy Rate current 13.00%
FX Reserves (Bn $) as at November 20, 2015 30.256
Money Market Highlights
30 Day 11.8756
90 Day 13.7109
180 Day 15.8391
USD 1 Month 0.2250
USD 2 Months 0.3110
USD 3 Months 0.4023
USD 6 Months 0.6407
USD 12 Months 0.9666
Tenor Maturity Yield (%)
91d 18-Feb-16 2.72
182d 26-May-16 5.59
364d 20-Oct-16 6.23
2y 27-Apr-17 9.63
3y 29-Jun-19 11.18
5y 13-Feb-20 11.47
Indicative Currency Exchange Rates
USDNGN 198.70 199.40
EURUSD 1.0559 1.0761
GBPUSD 1.4984 1.5186
USDJPY 122.41 122.44
USDCHF 1.01095 1.0211
GBPEUR 1.4050 1.4254
USDZAR 13.9840 14.1874