12 July 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: The International Monetary Fund (IMF), on Monday, admitted that the Nigerian economy “will probably” shrink in 2016, performing below the IMF forecast for the country. Speaking in Abuja, IMF resident representative in Nigeria, Gene Leon, said energy shortages and delayed budget weigh on output
in Africa’s largest economy.
After contracting by 0.4% in the first quarter of 2016, Leon said Nigeria will experience some growth in the second half of the year, but he added that it would not be enough to upturn initial shrinkage. “I think there is a high likelihood that the year 2016 as a whole will be a contractionary year,” Bloomberg quoted Leon as saying. “While the economy should look better in second half of the year, growth will probably not be sufficiently fast, sufficiently rapid to be able to negate the outcome of the first and second quarters.”
FX: The trading session was quiet yesterday and the interbank indicative closing range $/NGN 282.00 – $/NGN 283.00.
FIXED INCOME: T-Bill yields raced north yesterday in reaction to the bill auction results. Dealers also sold bills to generate NGN liquidity after Friday’s net withdrawal of cash. The average +300bps movement on short-dated bills (July to September) pulled the rest of the bill curve higher with average yield closing at 11.17%. Bond market also reacted negatively with average yield closing +34bps.
CHINA: China’s benchmark stock index rose to a three-month high amid speculation state-backed institutions intervened in both the share and currency markets, and as the nation’s pension funds prepared to invest in equities.
The Shanghai Composite Index closed 1.8% higher, with most of its gains coming in late afternoon trading. A measure of energy companies climbed the most in four months as China Coal Energy Co. paced gains after saying it expects a return to profit. Casino shares boosted Hong Kong equities following a note from brokerage Telsey Advisory Group saying that Macau gaming revenues are likely to halt two years of declines in July.
E.U.: European Union finance chiefs urged the U.K. to speed up its exit from the bloc after the quick selection of Theresa May as prime minister, warning that the uncertainty of drawing out the process impacts all sides.
“We must not waste time — the conservative party went fast” in getting May in position, EU Economic Affairs Commissioner Pierre Moscovici told reporters in Brussels on Tuesday. The acceleration of getting May into the post should also speed up the Brexit process, he said.
May is set to become prime minister Wednesday — almost two months earlier than initially anticipated after her last remaining rival unexpectedly withdrew.
COMMODITIES: Oil rebounded from a two-month low before data forecast to show U.S. inventories fell for the eighth week.
Futures gained as much as 0.9% in New York after dropping 1.4% on Monday. U.S. stockpiles lost 3.25 million barrels last week, according to a survey before government data due Wednesday. Iran plans to double crude exports as long as the increase is absorbed by global markets, while Libya’s state crude producer is seeking to reopen oil ports and restore output.
Oil has retreated from more than $51 a barrel last month as a rally spurred by supply disruptions in Nigeria and Canada and falling U.S. output loses momentum.
Macro Economic Indicators
Inflation rate (Y-o-Y) for May 2016, 15.60%
Monetary Policy Rate current 12.00%
FX Reserves (Bn $) as at Jul 04, 2016, 26.398
Money Market Highlights
30 Day 13.3054
90 Day 14.7244
180 Day 15.9053
USD 1 Month 0.4758
USD 2 Months 0.5594
USD 3 Months 0.6671
USD 6 Months 0.9374
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 13-Oct-16 9.56
182d 05-Jan-17 11.37
364d 15-Jun-17 14.08
2y 30-May-18 13.88
3y 29-Jun-19 14.09
5y 13-Feb-20 14.34
Indicative Currency Exchange Rates
USDNGN 281.00 284.00
EURUSD 1.1007 1.1209
GBPUSD 1.3081 1.3283
USDJPY 103.72 103.75
USDCHF 0.97905 0.9892
GBPEUR 1.1768 1.1970
USDZAR 14.2256 14.4289
JPYNGN 272.7497 272.8503
CHFNGN 287.59 289.28
EURNGN 313.64 315.00
GBPNGN 286.94 288.34