Financial market products & services update

*Financial markets.

*Financial markets.

05 February 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: Nigeria’s economic growth is forecast to accelerate in 2016 from its slowest pace in 16 years, as the government increases investment in power and housing projects and tackles wasteful spending, the statistics agency said.
Growth in gross domestic product is forecast to be 3.8% in 2016 from an estimated 3% last year, the National Bureau of Statistics said in a report on Thursday. The plunge in oil prices that’s hammering government revenue is fueling a transformation of the economy, the agency said.
The government is using the 2016 budget as an opportunity to reset and redirect the macroeconomic dynamics of the country,” according to the report. Proposals to plug fiscal leakages and invest at least 1.6 trillion naira ($8 billion) in capital projects are steps moving the economy in the right direction, the agency said.

FIXED INCOME: Yesterday started with a slight selloff in reaction to Wednesday’s PMA but managed to close a couple of basis points tighter. Market remains relatively dull especially in bonds with not much to report. Average volumes traded in market with little or no client enquiries. O/N rates closed at 5%. Money market liquidity estimated to be N312bn. All eyes on next week Wednesday’s bond auction. We expect a tepid session today.

FX: The CBN weekly Special auction for this week held yesterday and we expect the results later today. The intervention rate was maintained at $/NGN 197.00.

COMMODITIES: Gold is on course for its biggest weekly rise in a month as fading expectations for higher U.S. rates hurt the dollar and lifted bullion holdings to the most since July.
Bullion for immediate delivery was little changed at $1,155.36 an ounce at 3:07 p.m. in Melbourne, after it rose Thursday to its highest level since Oct. 29. The Bloomberg Dollar Spot Index, a gauge of the U.S. currency, fell 0.5% Thursday for a second daily decline. Gold has gained 3.4% this week, putting it on course for the largest weekly gain since Jan. 8.

U.S: The dollar is probably peaking against the euro and yen as its 18-month rally tempers U.S. economic growth and means the Federal Reserve will be slower to raise interest rates, according to Principal Global Investors.
The currency has surged about 25% on a trade-weighted basis since the middle of 2014, hurting exporters and “redistributing” U.S. growth to the rest of the world via cheaper imports, said Bob Baur, chief global economist at the company, which oversees about $340 billion. U.S. shares had their worst January since 2009.

U.K: Bank of England Deputy Governor Ben Broadbent said there are some signs that low inflation is having an impact on wage growth and that policy makers are in no hurry to increase interest rates.
Speaking on BBC Radio on Friday, Broadbent said there is “no urgency” to raise the benchmark rate from a record-low 0.5%, where it’s been for almost seven years.
His comments echo those of Governor Mark Carney who signaled on Thursday that higher borrowing costs are still some way off as the central bank cut its inflation forecast and the Monetary Policy Committee voted unanimously to maintain emergency policy settings.

Macro economic Indicators
Inflation rate (Y-o-Y) for December 2015 9.60%
Monetary Policy Rate current 11.00%
FX Reserves (Bn $) as at February 02, 2016 28.068

Money Market Highlights

O/N 5.1667
30 Day 8.0610
90 Day 09.6587
180 Day 11.1473
USD 1 Month 0.4285
USD 2 Months 0.5196
USD 3 Months 0.6192
USD 6 Months 0.8648

Benchmark Yields
Tenor Maturity Yield (%)

91d 05-May-16 4.59
182d 04-Aug-16 7.87
364d 19-Jan-17 9.20
2y 31-Aug-17 10.52
3y 30-May-18 10.78
5y 13-Feb-20 12.26

Indicative Currency Exchange Rates
Bid Offer

USDNGN 197.00 199.50
EURUSD 1.1088 1.1290
GBPUSD 1.4435 1.4637
USDJPY 116.90 116.93
USDCHF 0.98865 0.9987
GBPEUR 1.2890 1.3094
USDZAR 15.7840 15.9875

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