17 June 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: The International Monetary Fund (IMF) said on Thursday it welcomed the decision by Nigeria’s central bank to abandon its currency peg and adopt a flexible exchange rate policy, saying this was important to reduce fiscal and external imbalances.
IMF spokesman Gerry Rice told a weekly news briefing the fund wanted to see how effectively the Naira exchange market functioned once the new float system was put into effect next Monday.
Nigeria’s central bank governor said in a letter to President Muhammadu Buhari the bank expected the Naira to settle at around 250 to the dollar after it abandoned the peg of 197 to the dollar it had supported for 16 months.
FX: The CBN on Wednesday unveiled the new guidelines for the Interbank Market which will begin trading on Monday the 20th June 2016 and the rates will be determined by Market forces of demand and supply.
FIXED INCOME: Both T-bills and bond market were bearish yesterday, the aftermath of yesterday’s auction and CBN floating another OMO bill auction were factors. Yields moved up by 24bp and 17bps respectively and all the activities are still local driven. There was an OMO bill maturity yesterday of NGN 161bn, which was a reason CBN floated the OMO auction. The auction was however unsuccessful. We expect the market to sell off further because CBN intends to aggressively mop up money market liquidity.
U.K: Debt investors rushed to hedge against the risk that Britain votes to exit the European Union this week as polls show a departure has become a real possibility.
Credit derivatives traders bought and sold almost the equivalent of a full day’s worth of default insurance on investment-grade debt in Europe by 9:30 a.m. on Friday in London, according to data compiled by Bloomberg. Trading volumes across global credit-default swap benchmarks soared this week, sending up volatility and the cost to protect against losses.
Traders around the world are bracing for the result of the June 23 ballot on whether Britain should leave or remain in the 28-nation European Union.
E.U: Mario Draghi’s homeland is about to give him a taste of whether his mission to save the euro is beyond his control.
Local elections in Italy on June 19 will prefigure votes in Europe over the next 18 months that could see populist politicians translate their increasing support into real power. That may prove as big a threat to the single currency as the financial challenges the European Central Bank president has faced down over the four years since he pledged to do “whatever it takes.”
With inflation in the euro area set to gain traction by the end of this year, Draghi can claim that his single-minded focus on price stability by finding ever-more inventive ways to print money is finally starting to pay off.
COMMODITIES: Oil pared the biggest weekly decline in more than two months as the dollar extended its retreat, increasing the appeal of commodities priced in the U.S. currency.
Futures rose as much as 1.1% in New York, trimming a 9.8% drop the previous six sessions. The Bloomberg Dollar Spot Index dropped for a third day, heading for its second weekly decrease in three weeks. There’s no need for Russia and Saudi Arabia to cooperate on influencing crude markets right now and low prices may persist for 10 to 15 years, Russian Oil Minister Alexander Novak said in a Bloomberg television interview.
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 15, 2016, 26.447
Money Market Highlights
30 Day 8.3838
90 Day 12.0457
180 Day 13.6588
USD 1 Month 0.4460
USD 2 Months 0.5381
USD 3 Months 0.6563
USD 6 Months 0.9429
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 08-Sep-16 7.36
182d 15-Dec-16 9.79
364d 01-Jun-17 12.10
2y 30-May-18 12.81
3y 29-Jun-19 13.93
5y 13-Feb-20 14.07
Indicative Currency Exchange Rates
USDNGN 197.50 199.50
EURUSD 1.1152 1.1354
GBPUSD 1.4147 1.4350
USDJPY 104.22 104.25
USDCHF 0.95835 0.9685
GBPEUR 1.2565 1.2767
USDZAR 15.1512 15.3546
JPYNGN 190.9197 191.0003
CHFNGN 205.78 207.50
EURNGN 223.44 225.80
GBPNGN 286.94 288.3