Financial market products & services update

*Financial markets.

*Financial markets.

13 July 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: There is an indication that the insurance industry may embark on another round of recapitalization as the Minister of Finance, Mrs. Kemi Adeosun, has stated the need for insurance industry operators to increase their capital base and create opportunity for partnership and other strategic alliances within the system.
Adeosun, made the remark at the 2016 National Insurance Conference organized by the Insurance Industry Consultative Council (IICC) in Abuja.
The minister urged the operators not to see recapitalization as a punitive measure but an opportunity to reposition for the future.

FX: Market was largely unchanged yesterday. Last update on FX reserves show that the 30-day moving average gained 0.32% on the 8th July 2016.

FIXED INCOME: T-Bill market saw the most activity yesterday. The liquidity squeeze in the money market caused more selloff in bills. In bonds, it was very quiet with only a handful of trades going through during trading hours. There is a bond auction today – on offer is N120bn split evenly across the 5, 10 and 20 year. Ahead of the auction results, we expect market sentiment to remain bearish in both bills and bonds.

CHINA: China’s exports and imports slipped in dollar terms in June as soft demand at home and abroad continues to weigh on the world’s largest trading nation.
The Yuan posted a fifth straight drop last week, the longest losing streak this year, signaling policy makers are more tolerant of further weakening. With tepid global demand and businesses proving reluctant to invest, the government has been stepping up spending to keep its growth target of at least 6.5% this year in sight.
China sees “obvious” obstacles in foreign trade amid a severe and complex environment, the customs administration said in a statement accompanying the data. Exports face downward pressure in the third quarter, a customs administration official said at a briefing in Beijing.

U.K: Mark Carney looks poised to repeat a strategy that served him well during the global financial crisis.
As the Bank of England governor seeks to stave off any turmoil after Britain’s decision to quit the European Union, he has cited his experience at Canada’s central bank in 2008 as a guide. Acting early to prevent a deeper downturn became the hallmark of his approach in the prelude to the international slump, a perspective he can bring to the Monetary Policy Committee’s debate this week on whether to cut interest rates.
“One thing Carney is very good at doing is jumping ahead of the curve,” said James Rossiter, an economist at TD Securities in London and a former official at the both the British and Canadian central banks.

COMMODITIES: Oil fell from the biggest gain in three months after U.S. industry data showed the nation’s crude stockpiles increased, adding to concerns about oversupply.
Futures lost as much as 1.5% in New York. Inventories rose 2.2 million barrels last week; the American Petroleum Institute was said to report. Government data Wednesday is forecast to show a decline. Middle East production has climbed to a record while U.S. output slumps, a sign that OPEC’s strategy of defending market share is succeeding, the International Energy Agency said in its monthly oil market report.

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 08, 2016,  26.417

Money Market Highlights

O/N                            18.2917
30 Day                       15.1094
90 Day                       15.5624
180 Day                     16.2790
USD 1 Month            0.4785
USD 2 Months          0.5614
USD 3 Months          0.6691
USD 6 Months          0.9514
USD 12 Months        1.06675

Benchmark yields
Tenor       Maturity      Yield (%)

91d             13-Oct-16        9.56
182d          05-Jan-17       11.37
364d         15-Jun-17        14.51
2y              30-May-18     14.15
3y              29-Jun-19      14.21
5y              13-Feb-20      14.53

Indicative Currency Exchange Rates
Bid          Offer

USDNGN          281.00      284.00
EURUSD          1.0955       1.1157
GBPUSD          1.3144        1.3343
USDJPY           104.30       104.34
USDCHF          0.98195    0.9921
GBPEUR          1.1877        1.2080
USDZAR          14.2845     14.4885
JPYNGN          270.9097   271.0103
CHFNGN        285.54        287.23
EURNGN        311.93        313.29
GBPNGN        286.94       288.3

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