29 January 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Nigeria’s President Muhammadu Buhari stood firm in rejecting calls to devalue the currency of Africa’s top oil producer, saying that he wouldn’t “kill the naira.”
Letting the currency fall would only result in higher inflation and cause hardship for poor- and middle-class Nigerians, Buhari said, according to an e-mailed statement from his spokesman Garba Shehu on Thursday.
President Buhari said that proponents of devaluation will have to work much harder to convince him that ordinary Nigerians will gain anything from it,” Shehu said. “The president added that he had no intention of bringing further hardship on the country’s poor who, he said, have suffered enough already.”
Three-month naira forwards strengthened 3.3% to 226.57 per dollar on Thursday, the highest since Dec. 22. The black market rate has plunged as Nigerians have become desperate for foreign currency, falling to a record low of 306 per dollar this week.
FIXED INCOME: Nigeria rates were mostly lower yesterday. O/N rate eased to sub 2% as OMO maturity of N331bn came in. Demand was seen in both bonds and T- bills, though not aggressive. Even the new Jan 2026s was not left out, trading at average 12.17% for most of the day. Buy side client seen interested in offloading risk in bonds at mid market / market offer (small sizes going through at that level).
FX: The CBN weekly Special action for this week held yesterday and the Intervention rate at $/NGN 197.00. We expect the results to be released today.
COMMODITIES: OPEC delegates said they have no meeting planned with Russia after the country’s Energy Minister Alexander Novak indicated he was willing to meet with the group next month to coordinate oil-output policy. Four OPEC representatives said they hadn’t heard of any plan for talks. One Gulf member said de facto leader Saudi Arabia had no proposal to trim production by 5%, after Interfax reported the country had suggested such a cut at previous OPEC meetings, citing Novak. The minister said Russia would be willing to discuss output with OPEC, according to the news service.
CHINA: China’s benchmark money-market rate fell to the lowest in more than six weeks as the central bank increased the frequency of its open-market operations to ensure cash availability before next month’s holidays.
The People’s Bank of China added 100 billion Yuan ($15 billion) via reverse-repurchase agreements Friday, taking this week’s injection to a record 690 billion Yuan. The authority will conduct the operations daily between Jan. 29 and Feb. 19, except for the Lunar New Year holidays on Feb. 7-13, according to a statement posted on its website Thursday.
JAPAN: Bank of Japan Governor Haruhiko Kuroda sprung another surprise on investors today, adopting a negative interest-rate strategy to spur banks to lend in the face of a weakening economy.
The move to penalize a portion of banks’ reserves complements the BOJ’s record asset-purchase program, including 80 trillion yen ($666 billion) a year in government-bond purchases, which was kept unchanged at the board meeting. By a 5-4 vote, Kuroda led his colleagues to introduce a rate of minus 0.1% on certain excess holdings of cash.
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 28.213
Money Market Highlights
30 Day 8.3172
90 Day 09.5298
180 Day 10.9843
USD 1 Month 0.4280
USD 2 Months 0.5215
USD 3 Months 0.6181
USD 6 Months 0.8650
Tenor Maturity Yield (%)
91d 28-Apr-16 4.47
182d 28-Jul-16 6.65
364d 19-Jan-17 8.71
2y 31-Aug-17 10.19
3y 30-May-18 10.43
5y 13-Feb-20 11.96
Indicative Currency Exchange Rates
USDNGN 197.00 199.50
EURUSD 1.0806 1.1009
GBPUSD 1.4293 1.4496
USDJPY 120.77 120.81
USDCHF 1.01185 1.0220
GBPEUR 1.3094 1.3297
USDZAR 15.9709 16.1746