27 January 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Suddenly, the possibility of a more than 20% slump in Nigeria’s currency is off the cards, for now at least.
Traders on Tuesday lowered their expectations on the size of naira devaluation as central bank Governor Godwin Emefiele stuck to his policy of keeping a stable exchange rate.
Three-month naira forwards strengthened the most on record against the dollar after Emefiele gave no indication in the Monetary Policy Committee statement released on Tuesday that he’s ready to ease controls on the currency. Crude prices at 12-year lows of around $30 a barrel, an unprecedented government spending plan and black-market rates near records have been heaping pressure on authorities to scrap the country’s almost one-year limits on naira trading and allow the currency to depreciate.
FIXED INCOME: T-Bill market saw some selling to raise liquidity – especially the short dated bills (these moved +72bps). OMO maturity of N331bn on Thursday will ease this pressure today but no indications yet as to when FAAC will meet. Bonds saw some demand yesterday ahead of the MPC mainly driven by locals. MPC outcome was in line with our expectations – all indices left unchanged including the current FX regime.
FX: The CBN announced its Special action for this week to hold tomorrow and the Intervention rate at $/NGN 197.00.
COMMODITIES: Oil resumed its decline near $30 a barrel after U.S. industry data showed crude stockpiles increased, exacerbating a global glut.
Futures slid as much as 3.7% in New York. Inventories surged by 11.4 million barrels last week, the industry-funded American Petroleum Institute was said to report. If government data on Wednesday — which is forecast to show a 4 million-barrel gain — shows an equivalent rise, it would be the largest increase in weekly reports since May 1996.
Crude is down about 17% this year as volatility in global markets adds to concern over brimming U.S. stockpiles and the outlook for increased exports from Iran after the removal of international sanctions.
CHINA: China’s central bank gave guidance two weeks ago to some Chinese banks in Hong Kong to suspend offshore Yuan lending to curb short selling and tighten liquidity, said people with knowledge of the matter.
The People’s Bank of China told banks including BOC Hong Kong (Holdings) Ltd. and Industrial & Commercial Bank of China (Asia) on Jan. 11 to curb lending unless necessary, said the people, who asked not to be identified as the instructions weren’t public.
U.K: U.K. house prices rose for a seventh month in January and a strengthening jobs market may support acceleration in gains, Nationwide Building Society said.
The average price of a home climbed 0.3% from December to 196,829 pounds ($282,100), the lender said in a statement on Wednesday. The annual rate of growth was 4.4% in January compared with 4.5% the previous month. Recent reports have pointed to a shortage of homes for sale, which is pushing up values. At the same time, the lowest unemployment rate in a decade, faster-than-inflation wage increases, and low borrowing costs are bolstering consumers’ finances and supporting property demand.
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 28.272
Money Market Highlights
30 Day 8.9472
90 Day 10.7427
180 Day 11.9952
USD 1 Month 0.4306
USD 2 Months 0.5223
USD 3 Months 0.6213
USD 6 Months 0.8657
Tenor Maturity Yield (%)
91d 28-Apr-16 4.58
182d 28-Jul-16 7.23
364d 19-Jan-17 8.39
2y 31-Aug-17 10.27
3y 30-May-18 10.48
5y 13-Feb-20 12.08
Indicative Currency Exchange Rates
USDNGN 197.00 199.50
EURUSD 1.0767 1.0968
GBPUSD 1.4235 1.4437
USDJPY 118.22 118.25
USDCHF 1.01115 1.0213
GBPEUR 1.3091 1.3293
USDZAR 16.3264 16.5287