Financial market products & services update

*Financial markets.

*Financial markets.

21 March 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: The volatility of the naira against the United States dollar and other major global currencies are expected to top the agenda as the Central Bank of Nigeria’s Monetary Policy Committee begins its two-day bi-monthly meeting today (Monday).
Economic and financial analysts believe the latest MPC meeting, which is the second in the year, will be a hot session due to the numerous challenges facing the economy, especially the continued fall of the naira at the parallel market and the slow growth rate the economy is witnessing as a result of the limited supply of foreign exchange to key industries.
Experts said the Presidency and the CBN’s continued resistance to calls for the devaluation of the naira by local and foreign stakeholders amid the wide margin between the naira-dollar exchange rates in the official and parallel forex markets vis-à-vis the fast deteriorating state of the economy would make the session a bit stormy.

FIXED INCOME: More buying to close last week in both T-bills and bonds even though bond auction-debit had taken out N100bn from the system. Money market liquidity now just slightly in excess of N100bn. With the lower liquidity and no OMO maturity this week, subscription at Friday’s OMO was expected to be weak. 223day paper (27 Oct 16 bills) was offered at the auction but it was not surprising that nothing was sold. MPC is meeting Monday and Tuesday this week and we expect them to maintain status quo regardless of the recent inflation prints.
FX: The CBN weekly special auction result for last week is still being expected. The intervention rate was maintained at $/NGN 197.00
CHINA: The Yuan traded offshore fell for the second day after China’s central bank weakened the daily reference rate by the most since January as a gain in the dollar drove declines in Asian currencies.
The Yuan traded in Hong Kong dropped 0.2% to 6.4760 a dollar as of 10:20 a.m. local time. The People’s Bank of China reduced the fixing, which restricts onshore moves to 2% on either side, by 0.3% to 6.4824, the most since Jan. 7. The currency traded in Shanghai retreated 0.13%, according to China Foreign Exchange Trade System prices.

EURO: The European Central Bank began charging banks interest on deposits in June 2014 to encourage them to lend more to companies and consumers. It hasn’t worked.
Deposits at the ECB by euro-area banks in excess of required reserves have jumped six-fold since the introduction of negative interest rates while lending within the currency bloc has barely budged. Of the 646 billion Euros ($730 billion) that banks added in assets during the period, about 85% has ended up as deposits at the central bank.

COMMODITIES: Oil fell for a second day, extending declines from a three-month high, as the number of drill rigs active in the U.S. rose for the first time in three months amid a global glut.
Futures slid as much as 1.7% in New York after decreasing 1.9% Friday. Drillers put one rig back to work last week, marking the first addition since late last year, according to data from Baker Hughes Inc. Ecuador will propose a cut to output at a meeting next month of producers from within and outside OPEC to help boost prices, according to President Rafael Correa. Energy companies led declines on the MSCI Asia Pacific Index.

Macro Economic Indicators
Inflation rate (Y-o-Y) for February 2016,     11.38%
Monetary Policy Rate current                         11.00%
FX Reserves (Bn $) as at March 17, 2016,    27.864

Money Market Highlights

O/N                                 5.2950
30 Day                            8.9555
90 Day                          10.0515
180 Day                        11.0995
USD 1 Month               0.4283
USD 2 Months             0.5142
USD 3 Months             0.6243
USD 6 Months             0.8912

Benchmark Yields
Tenor      Maturity      Yield (%)

91d             16-June-16      6.64
182d           22-Sep-16        7.99
364d          02-Mar-17       8.99
2y               31-Aug-17        9.76
3y               30-May-18    10.13
5y               13-Feb-20      11.19

Indicative Currency Exchange Rates
Bid         Offer

USDNGN           197.50       199.50
EURUSD            1.1153        1.1356
GBPUSD            1.4295       1.4497
USDJPY             111.39        111.42
USDCHF           0.96575     0.9759
GBPEUR           1.2695        1.2899
USDZAR           15.2673      15.4708

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