Financial market products & services update

*Financial markets.

*Financial markets.

26 January 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: The Association of Bureau De Change Operators of Nigeria on Monday called on the Central Bank of Nigeria to as a matter of urgency come up with modalities that would regulate how funds would be sourced from the autonomous window of the foreign exchange market.
The Chairman of the association, Mr. Aminu Gwadabe, told our correspondent in an interview that the need for the release of a framework became imperative due to what he described as the increasing rate of mistrust between the regulator and the operators. He said banks and oil companies had stopped the sale of foreign exchange to the BDCs because of a directive by the CBN stopping such transactions.
Gwadabe said unless the directive was rescinded by the central bank, it would be difficult for the BDC operators to source for foreign exchange.

FIXED INCOME: This week started soft week ahead of the MPC. T-Bill yields moved +11bps to close at 5.91% and bonds +5bp to close at 11.70%. April 2017s saw the most pressure with real money offloading decent size. O/N rates down to 2% because of FX refunds for unsuccessful bids. Money market liquidity now N626bn and T-bills saw some selling on the short end because FX refund wasn’t so huge.

FX: The CBN maintained its Special Intervention rate at $/NGN 197.00 last week. MPC meeting started yesterday and will conclude today.

COMMODITIES: Oil extended its decline back below $30 a barrel before weekly U.S. government data forecast to show crude stockpiles expanded for a third week, exacerbating a global glut.
Futures decreased as much as 3.1% in New York after dropping 5.8% Monday. Inventories probably rose by 4 million barrels last week, a Bloomberg survey showed before an Energy Information Administration report Wednesday. Saudi Arabia, the world’s biggest crude exporter, said low prices won’t reduce its spending on energy projects while the head of OPEC called on producers outside the group to assist in reducing the worldwide oversupply.

CHINA: China’s stocks tumbled to the lowest levels in 13 months amid concern capital outflows will accelerate as the economy slows and support for the Yuan eats into the nation’s foreign reserves.
The Shanghai Composite Index plunged 6.4% to 2,749.79 at the close. All industry groups slumped, ranging from commodity companies to new-economy shares such as technology. Besides data showing outflows hitting an estimated $1 trillion last year, investors were concerned about a possible cash squeeze even as the central bank flooded the financial system before the upcoming Chinese new year holiday.

EUROPE: Mario Draghi hit back at critics of his policies, saying the European Central Bank must fulfill its inflation mandate in order to maintain its credibility.
ECB policy makers have less than seven weeks until a March 10 meeting when they’ll decide whether their 1.5 trillion-euro ($1.6 trillion) bond-purchase plan and negative interest rates are enough to meet their inflation goal of just under 2%. With slumping oil costs weighing on consumer prices that are already close to stagnating, Draghi is trying to convince investors that the central bank remains willing to act if needed.

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 22, 2016         28.346

Money Market Highlights

O/N                                1.0000
30 Day                           8.8643
90 Day                         10.6576
180 Day                       11.8162
USD 1 Month              0.4255
USD 2 Months            0.5185
USD 3 Months            0.6191
USD 6 Months            0.8650

Benchmark Yields
Tenor     Maturity      Yield (%)

91d          28-Apr-16         4.58
182d        28-Jul-16          7.27
364d       19-Jan-17          8.31
2y            31-Aug-17         10.26
3y            30-May-18       10.54
5y            13-Feb-20        12.26

Indicative Currency Exchange Rates
Bid         Offer

USDNGN          197.00       199.50
EURUSD           1.0768       1.0970
GBPUSD           1.4114         1.4315
USDJPY            117.75         117.77
USDCHF           1.00705     1.0172
GBPEUR           1.2976        1.3180
USDZAR           16.5011       16.6989

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