13 January 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Monday’s stoppage of foreign exchange sales to Bureau De Change operators by the Central Bank of Nigeria failed to lift the naira on Tuesday as the currency exchanged for 300 against the United States dollar in Kano, 290 in Lagos and 292 in Abuja. Financial experts said the naira would decline further, while private sector operators described the move as a welcome development. The ban was announced on Monday, when naira trading at 285 against the dollar at the parallel market from 278 on Friday. The Acting President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, spoke to newsmen in a telephone interview that the currency traded against the greenback at 300, 290 and 292 in Kano, Lagos and Abuja a day after the CBN announcement.
FIXED INCOME: Yields continued to push north in bonds yesterday. We broke the ‘psychological’ level of 12.50%. That brought some panic with prices gapping towards close. Buy side clients had been on the side lines but we could see some interest trickle in today. T-Bills finding some solace in the excess liquidity in the system. Money market still excess of N1 trillion. Market sentiments will be driven by the announcements of OMO auctions in the coming days.
FX: The CBN announced that a special auction will hold on Thursday 14th January 2015. The intervention rate will be maintained at $/NGN 197.00
COMMODITIES: Oil bounced back after tumbling below $30 a barrel for the first time in 12 years. A persistent oversupply means prices still haven’t staved off the threat of further declines.
Futures rose as much as 2.2% in New York, after dropping 3.1% on Tuesday. While the industry-funded American Petroleum Institute was said to report U.S. inventories fell 3.9 million barrels last week, government data on Wednesday is forecast to show supplies expanded. The world is now “confronting $20 oil,” according to Citigroup Inc. WTI for February delivery climbed as much as 66 cents to $31.10 a barrel on the New York Mercantile Exchange and was $30.82 at 1:48 p.m. Hong Kong time.
CHINA: The Yuan traded in Hong Kong headed for the biggest five-day gain on record as China’s central bank steadied the currency’s fixing and intensified efforts to curb outflows.
The monetary authority kept the reference rate little changed for the fourth day in a row. It set the fixing, which restricts onshore moves to a maximum 2% on either side, at 6.5630 a dollar, 0.18% stronger than the onshore Yuan’s official closing price of 6.5750 on Tuesday. The offshore Yuan rose 0.13% to 6.5752 a dollar as of 10:11 a.m. in Hong Kong, according to prices compiled by Bloomberg. That takes its five-day advance to an unprecedented 2.1%.
SOUTH AFRICA: South Africa has witnessed a structural decline in inflation rates from the 1990s. Yet it has increasingly faced a stagflationary dilemma of slowing growth and higher inflation since the global financial crisis, driven by above-productivity wage increases, an expanding public sector and a weaker currency. Lower oil prices have given some reprieve, with inflation falling to 4.8% in November 2015 from 6.6% in May 2014, but the weakening rand will challenge the central bank in 2016.
Macro Economic Indicators
Inflation rate (Y-o-Y) for November 2015 9.37%
Monetary Policy Rate current 11.00%
FX Reserves (Bn $) as at January 11, 2016 28.782
Money Market Highlights
30 Day 8.7663
90 Day 10.0460
180 Day 11.6880
USD 1 Month 0.4240
USD 2 Months 0.5145
USD 3 Months 0.6221
USD 6 Months 0.8513
Tenor Maturity Yield (%)
91d 07-Apr-16 4.53
182d 14-Jul-16 7.69
364d 05-Jan-17 8.85
2y 31-Aug-17 12.06
3y 30-May-18 12.15
5y 13-Feb-20 12.54
Indicative Currency Exchange Rates
USDNGN 197.00 199.50
EURUSD 1.0717 1.0919
GBPUSD 1.4332 1.4534
USDJPY 118.28 118.31
USDCHF 1.00065 1.0106
GBPEUR 1.3239 1.3443
USDZAR 16.3648 16.5682