12 January 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: After months of mounting pressure from economic analysts, small businesses, manufacturing concerns, the International Monetary Fund (IMF), and politicians such as Senate President Bukola Saraki, the Central Bank of Nigeria (CBN) monday relaxed some of its foreign currency controls by lifting its ban on foreign currency cash deposits in commercial banks.
The CBN Governor, Mr. Godwin Ifeanyi Emefiele, who disclosed this in a press statement he personally signed, said the policy should be implemented with immediate effect. He equally announced that the central bank would discontinue its sale of foreign exchange to Bureau de Change (BDC) operators.
According to Emefiele, BDC operators would now need to source their foreign exchange from autonomous sources.
His directive, however, led to a slump of the naira on the parallel market to N282 to the dollar yesterday, from N277 at the weekend.
FIXED INCOME: Some respite yesterday when the bond auction circular was released as DMO stuck to the minimum monthly borrowing target. N80bn was on offer vs. market expectation of N100b (evenly split between the Feb 2020s and the Jan 2026s – new issue). This was however short-lived and average we closed 92bps wider. T-Bill market saw yields move higher by 16bps.
FX: The CBN made no announcement regarding FX auction yesterday, suggesting that market will now present a single FX bid at its special auction once a week.
COMMODITIES: Oil extended declines from the lowest close in more than 12 years before U.S. government data forecast to show crude supplies expanded, exacerbating a global glut.
Futures fell as much as 2.2% in New York after dropping 5.3% Monday. Stockpiles probably rose by 2 million barrels last week, a Bloomberg survey showed before a report from the Energy Information Administration Wednesday. Iran will begin selling a new grade of crude as soon as March as it prepares to boost production once international sanctions blocking exports are lifted, according to an official at the country’s state-run oil company.
CHINA: China’s central bank dealt Yuan bears a double blow in Hong Kong’s offshore market as intervention closed the discount to the onshore rate and made it more expensive to borrow and short the currency.
The Yuan traded in Hong Kong’s free market rose as much as 0.7%, temporarily erasing a gap with the Shanghai exchange rate that widened to a record 2.9% last week. The cost of borrowing China’s currency overnight in Hong Kong’s interbank market jumped by 53% points to 66.82%, more than five times the previous record reached on Monday. .
SOUTH AFRICA: It took 15 minutes at the start of trading Monday for South Africa’s rand to plummet more than 9% in what traders said may be a prelude of the new normal in the global $5.3 trillion-a-day currency market.
Such flash crashes, which have already haunted traders in U.S. stocks and bonds in recent years, will probably become a more regular feature of currency trading as liquidity sometimes dries up amid regulatory limits to financial risk-taking and reduced investor appetite for assets of fragile emerging economies, according to Insight Investment Management Ltd. and Citigroup Inc.
Macro Economic Indicators
Inflation rate (Y-o-Y) for November 2015 9.37%
Monetary Policy Rate current 11.00%
FX Reserves (Bn $) as at December 17, 2015 28.895
Money Market Highlights
30 Day 8.5936
90 Day 9.9720
180 Day 11.3511
USD 1 Month 0.4238
USD 2 Months 0.5149
USD 3 Months 0.6211
USD 6 Months 0.8508
Tenor Maturity Yield (%)
91d 07-Apr-16 5.04
182d 14-Jul-16 8.05
364d 05-Dec-17 8.85
2y 31-Aug-17 11.49
3y 30-May-18 11.15
5y 13-Feb-20 11.54
Indicative Currency Exchange Rates
USDNGN 197.00 199.50
EURUSD 1.0790 1.0995
GBPUSD 1.4417 1.4619
USDJPY 117.28 117.31
USDCHF 0.99395 1.0040
GBPEUR 1.3229 1.3435
USDZAR 16.7817 16.9841