15 June 2016, Sweetcrude, Houston — Local and international financial market products & services update.
NIGERIA: Three weeks after he announced the introduction of a flexible exchange rate regime, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, will today finally unveil the much-anticipated guidelines paving the way for the new forex regime.
This is just as the Minister of Finance, Mrs Kemi Adeosun, disclosed that the federal government has resolved to facilitate a N90 billion loan for the 36 states of the federation to enable them meet their obligations, but cautioned that it should not be deemed a bailout for the states but a facility with stringent conditions attached to it.
A top CBN official, who confirmed yesterday that Emefiele would brief the press today on the flexible exchange regime however did not provide further details on what the guidelines would entail.
FX: The results for the CBN weekly Special intervention auction for last week was released late last night and No Intervention request for the week made yet. The CBN will announce the new flexible FX policy today.
FIXED INCOME: NBS released the inflation data just before market open yesterday, Y-O-Y inflation number jumped from 13.7% in April to 15.6% in May. This was majorly in line with expectations because of the increase in general prices in the economy. At market open bond and T-bills prices pulled wide, and b/o spread was about 40-50bps, but the spreads gradually closed up by market close. T-bill market seemed not to bothered by the gaping cost-push inflation as there were still pockets of demand for short dated T-bill, but streets remained better sellers of bonds. T-bill and Bond Auction today.
U.K: The amount wagered on the pound falling to 1980s levels has more than doubled during the past three months.
With barely a week until Britons vote on membership of the European Union, polls increasingly suggest an exit is a real possibility. Investors are responding by bolstering their protection against sterling declines and have bet 25 billion pounds ($35 billion) this year on options that would profit if the currency tumbled to $1.35 or lower after the June 23 vote.
That’s a more than 4% drop from current levels and would see the pound weaker than its 2009 low of $1.3503 to revisit rates last seen in September 1985.
CHINA: China is cranking up state spending on infrastructure to support economic growth as private-sector investment falters, raising concerns that reforms to the inefficient state sector are being kicked further down the road by the resulting build-up in debt.
Policy insiders say the slowdown in private investment is particularly worrying since Beijing’s extra spending was designed to shore up investor confidence and spur private spending, not to repeat the experience of 2008-09, when a 4 trillion Yuan ($610 billion) stimulus package saddled the economy with a mountain of debt.
COMMODITIES: Oil fell a fifth day, heading for the longest run of declines since February, as U.S. industry data showed crude stockpiles expanded, exacerbating an oversupply.
Futures fell as much as 1.9% in New York after dropping 5.4% the previous four sessions. Inventories rose 1.16 million barrels last week; the American Petroleum Institute was said to report. Nigerian militants, whose attacks on oil infrastructure have cut the country’s output to its lowest level in 27 years, said for the first time they are considering peace talks.
Macro Economic Indicators
Inflation rate (Y-o-Y) for May 2016, 15.60%
Monetary Policy Rate current 12.00%
FX Reserves (Bn $) as at Jun 13, 2016, 26.448
Money Market Highlights
30 Day 8.6182
90 Day 11.6684
180 Day 13.3957
USD 1 Month 0.4420
USD 2 Months 0.5372
USD 3 Months 0.6525
USD 6 Months 0.9364
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 08-Sep-16 7.29
182d 15-Dec-16 9.60
364d 01-Jun-17 11.66
2y 30-May-18 12.65
3y 29-Jun-19 14.04
5y 13-Feb-20 13.98
Indicative Currency Exchange Rates
USDNGN 197.50 199.50
EURUSD 1.1117 1.1320
GBPUSD 1.4112 1.4315
USDJPY 106.34 106.37
USDCHF 0.96085 0.9711
GBPEUR 1.2563 1.2768
USDZAR 15.1775 15.3801
JPYNGN 187.0697 187.1703
CHFNGN 205.20 206.89
EURNGN 222.72 225.10
GBPNGN 286.94 288.34