13 June 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Any time this week, which analysts believe may be Friday, when the Central Bank of Nigeria usually takes bids from authorised dealers of foreign exchange, the apex bank will unveil its much-awaited guidelines on a flexible foreign exchange regime.
This is coming after two weeks of intensive consultations with major stakeholders, including investors, bankers, fund managers and money market operators in a bid to strike an equilibrium and produce a workable policy that will bring price stability to the naira.
The CBN had been heavily hamstrung by dwindling oil revenue receipts, brought about by the violent activities of militants in the Niger Delta, which have reduced the country’s monthly oil sales income from the all-time high of $3.2bn just 15 months ago to about $500,000 in April.
FX: The CBN weekly Special intervention auction for last week was held on Friday and the intervention rate was maintained at $/NGN 197.00.
FIXED INCOME: Market was pretty quiet on Friday, there wasn’t a lot of price action and traded volume was similarly low. There are still uncertainties in the bond market about market direction and this is also a factor to low activity level. There’ll be the t-bill and bond auction, and also inflation data release this week, this are critical events that would determine market direction.
W-O-W T-bill yields dropped by 25bps because of a robust money market liquidity, while bond yields jumped up by 50bps ahead of next week’s auction.
E.U.: Cheaper oil prices since 2014 have probably been of little net benefit to the global economy and may even have been a drag on growth, according to the European Central Bank.
“While most of the oil-price decline in 2014 could be explained by the significant increase in the supply of oil, more recently the lower price has reflected weaker global demand,” the ECB said on Monday in an article from its Economic Bulletin. “Although the low oil price may still support domestic demand through rising real incomes in net oil-importing countries, it would not necessarily offset the broader effects of weaker global demand.”
The analysis strikes at the ECB’s debate over whether it should be adding monetary stimulus to the euro-area economy as lower heating and fuel bills give consumers more spending power. President Mario Draghi has argued that as well as depressing inflation — the ECB’s main challenge — a drop in energy prices can be a sign of subdued economic activity that needs to be countered.
U.K: Prime Minister David Cameron turned to his traditional rivals in the opposition Labour Party to win over undecided voters with just 10 days to stop Britain from voting to leave the European Union.
Gordon Brown, who was ousted by Cameron in 2010, will make the case to stay in the 28-nation bloc on Monday, and other media interventions have been moved aside to ensure the former premier’s message is heard. The support of Labour voters will be crucial if the government is to avert a so-called Brexit in the June 23 referendum.
COMMODITIES: Crude fell a third day after the number of rigs drilling for oil in the U.S. rose for the second week.
Futures fell as much as 1.8% in New York after dropping 4.2% in the previous two sessions. Rigs targeting crude in the U.S. rose by 3 to 328 last week, capping the longest run of weekly gains since August, Baker Hughes Inc. said Friday. Iran is seeking to boost output by 600,000 to 700,000 barrels a day over five years from fields in an area west of the Karoun River along the Iraqi border, Oil Minister Bijan Namdar Zanganeh said.
Macro Economic Indicators
Inflation rate (Y-o-Y) for April 2016, 13.70%
Monetary Policy Rate current 12.00%
FX Reserves (Bn $) as at Jun 08, 2016, 26.401
Money Market Highlights
30 Day 9.8766
90 Day 12.2610
180 Day 13.7643
USD 1 Month 0.4465
USD 2 Months 0.5397
USD 3 Months 0.6556
USD 6 Months 0.9441
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 08-Sep-16 7.44
182d 08-Dec-16 9.58
364d 01-Jun-17 11.73
2y 30-May-18 12.59
3y 29-Jun-19 13.85
5y 13-Feb-20 13.69
Indicative Currency Exchange Rates
USDNGN 197.50 199.50
EURUSD 1.1162 1.1365
GBPUSD 1.4032 1.4233
USDJPY 106.01 106.03
USDCHF 0.96065 0.9707
GBPEUR 1.2440 1.2644
USDZAR 15.0611 15.2649
JPYNGN 187.7297 187.8203
CHFNGN 205.28 206.96
EURNGN 223.58 225.10
GBPNGN 286.94 288.34