Financial market products & services update

*Financial markets.

*Financial markets.

10 February 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: The Ministry of Budget and National Planning on Tuesday admitted that there were errors in the 2016 Budget, blaming the development on the adoption of the Zero-Based Budgeting System.
The ministry stated this in a statement by the Director of Information in the ministry, Mr. Charles Dafe.
It explained that while the budget, which was presented to the National Assembly by President Muhammadu Buhari was well structured and targeted at reviving the economy, those responsible for budgeting at the various ministries, departments and agencies of government were still grappling with some of the technicalities used in the fiscal document.
It said the new Zero-Based Budgeting approach was still new to most of the agencies of the government as it was a far departure from the envelope system of budget.

FIXED INCOME: Rates on T-bills were down by 23bps as system liquidity was robust and the absence of OMO auction. Funding for the CBN special FX auction to be held on Thursday caused overnight rates to rise to 7%, eventually closing at 4%. We expect the market to take direction from today’s bond auction.

FX: The CBN announced its weekly Special auction for this week to hold on Thursday and the intervention rate was maintained at $/NGN 197.00.

COMMODITIES: Oil snapped a four-day losing streak, rebounding from the lowest close in almost three weeks before U.S. crude stockpile data.
Futures gained as much as 2.5% in New York after slumping 13% in the previous four sessions, the biggest four-day slide since November 2014. U.S. crude inventories are forecast to increase by 2.85 million barrels, according to a Bloomberg survey before government data on Wednesday. The CBOE Crude Oil Volatility Index, which measures expectations of price swings, rose to the highest since 2009 on Tuesday.

U.S: Dollar bulls are looking to Janet Yellen for salvation. They may be disappointed.
The greenback has dropped against 13 of 16 major counterparts this month as traders pared to 30% the odds of a Federal Reserve interest-rate increase this year. Analysts have started to examine the prospect of the U.S. following the euro area and Japan in adopting rates below zero if the economy deteriorates. The Fed chair in testimony before Congress Wednesday should “deflate” some of the enthusiasm around negative rates and that may boost U.S. yields and support the dollar, according to Citigroup Inc.

JAPAN: Shares in Japan stumbled again Wednesday while Australia’s main stock benchmark fell into bear territory amid volatility in the oil market.
The Nikkei Stock Average was last down 2.6% at 15673.21, flirting with the loss of all of its gains since the Bank of Japan’s easing expansion in October 2014. The benchmark lost 5.4% Tuesday, its largest percentage loss since June 2013.
Investors were still seeking a haven from global market volatility in the Japanese yen, which rose 0.4% to its strongest level since 2014 against the U.S. dollar, which traded for ¥114.45.

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 03, 2016    27.916

Money Market Highlights
NIBOR (%)

O/N                               4.0016
30 Day                          8.0797
90 Day                          9.1754
180 Day                      10.9793
LIBOR (%)
USD 1 Month             0.4292
USD 2 Months           0.5180
USD 3 Months           0.6210
USD 6 Months           0.8706

Benchmark Yields
Tenor       Maturity       Yield (%)

91d              05-May-16       3.67
182d            11-Aug-16         7.72
364d           02-Feb-17         9.37
2y                31-Aug-17        10.65
3y                30-May-18      10.86
5y                13-Feb-20       12.26

Indicative Currency Exchange Rates
Bid         Offer

USDNGN            197.00        199.50
EURUSD             1.1076         1.1279
GBPUSD             1.4340         1.4542
USDJPY              115.40          115.44
USDCHF            0.98105        0.9912
GBPEUR            1.2816           1.3020
USDZAR            16.0446         16.2490

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