20 January 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Nigeria’s stocks are caught in a devaluation trap. Not even the best day for emerging-market equities in two months could buoy demand for stocks in Africa’s biggest economy on Tuesday. The All Share Index in Lagos dropped for an eighth day, sliding further into a bear market, even as those of almost every other major developing nation advanced.
The decline shows how leery investors have become about putting money into a country most investors say is on the cusp of devaluing its currency. Nigeria’s central bank has kept a stranglehold on the naira’s value via currency-trading curbs and restrictions on imports since March last year in an effort to stem capital flight from the continent’s biggest oil producer.
FIXED INCOME: Decent move seen in bonds yesterday. The expectation of the FX liberalization at the forth coming MPC and possible offshore interest on the back of that is whispered to be behind the moves in bonds.
T-bill market felt a bearish sentiment yesterday because of the OMO auction and today’s primary market auction. Our expectation for the market today is mixed given the auction as dealers seek for directions.
FX: The CBN announced its weekly Intervention to hold this Thursday and the intervention rate at $/NGN 197.00.
COMMODITIES: Oil extended its decline from the lowest close in more than 12 years before weekly U.S. government data forecast to show crude stockpiles expanded, exacerbating a global glut.
Futures lost as much as 3.4% in New York after falling 3.3% Tuesday to the lowest since September 2003. Inventories probably increased by 2.75 million barrels last week, according to a Bloomberg survey before a report from the Energy Information Administration Thursday. Markets could “drown in oversupply,” sending prices even lower as demand growth slows and Iran boosts exports, according to the International Energy Agency.
SAUDI ARABIA: Saudi Arabian banks are under orders to stop selling currency products that allow investors to make cheap bets on a devaluation of the riyal, according to five people with knowledge of the matter.
The Saudi Arabian Monetary Agency told banks not to sell options contracts on riyal forwards at a meeting in Riyadh on Jan 18., the people said, asking not to be identified as the information is private. The directive applies to local banks and the Saudi branches of international banks, the people said.
Traders are betting that a slump in the oil price and slowdown in economic growth will cause Saudi Arabia to abandon its 30-year peg to the dollar.
U.S: U.S. index futures tumbled as the selloff in global equities intensified after oil dropped below $28 a barrel to extend a 12-year low.
Contracts on the Standard & Poor’s 500 Index due in March dropped 1.5% to 1,844.25 as of 7:21 a.m. in London, while Nasdaq 100 Index futures retreated 1.8%. West Texas Intermediate slumped 3.3% to $27.52 a barrel, heading for the lowest close since September 2003 and driving stock declines across Asia that sent Japanese shares into a bear market.
Global equities’ worst start to a year on record is deepening as crude continues its plunge and a slowdown in China weighs on sentiment. About $6.6 trillion was wiped from the value of stocks through Tuesday, and a measure of the world’s shares has lost 9.2% in 2016.
Macro Economic Indicators
Inflation rate (Y-o-Y) for December 2015 9.60%
Monetary Policy Rate current 11.00%
FX Reserves (Bn $) as at January 18, 2016 28.475
Money Market Highlights
30 Day 7.6786
90 Day 9.7721
180 Day 10.9290
USD 1 Month 0.4260
USD 2 Months 0.5133
USD 3 Months 0.6238
USD 6 Months 0.8532
Tenor Maturity Yield (%)
91d 21-Apr-16 4.41
182d 14-Jul-16 7.63
364d 05-Jan-17 8.00
2y 31-Aug-17 10.56
3y 30-May-18 10.95
5y 13-Feb-20 12.17
Indicative Currency Exchange Rates
USDNGN 197.00 199.50
EURUSD 1.0842 1.1045
GBPUSD 1.4064 1.4266
USDJPY 116.74 116.77
USDCHF 0.99665 1.0069
GBPEUR 1.2840 1.3044
USDZAR 16.7336 16.9376