21 July 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: The grim reality of a depressed economy appears to be staring many ministries, departments, and agencies (MDAs) of the federal government in the face, as they are hamstrung by a paucity of funds to meet their obligations, including recurrent expenditure.
The cash crunch may not be unconnected to the disclosure by the Secretary to the Government of the Federation (SGF), Babachir Lawal, to the Senate recently that there has been a 40% drop in revenue in the last five months largely due to the activities of militants in the Niger Delta.
At the 2016 budget breakdown on May 12, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, and his finance ministry counterpart, Mrs. Kemi Adeosun, had assured Nigerians that the release of N350 billion slated for capital projects would commence the next day.
FX: Another quite day yesterday as interbank liquidity seems to have dwindled. Closing indicative ranges $/NGN 293.00 – 297.50.
FIXED INCOME: Auction prints were not surprising following CBN’s new posture. Total of N128bn was offered but N205bn was sold at yields of 14.66%, 16.78% and 19.72% on the 91, 182 and 364 days respectively. Before the auction results, the bond market was mostly quiet but pockets of demand evident in the T-bill market. Sellers emerged after the results were released especially on the October bills (which had traded much lower than the 91 day stop rate).
E.U: Mario Draghi may have longed, just once, to have a quiet monetary-policy meeting before the summer break. Never mind.
Britain’s vote four weeks ago to leave the European Union will loom large when the European Central Bank president addresses reporters in Frankfurt on Thursday, after a meeting of the Governing Council. While the action isn’t seen as likely straight away, he might signal more stimulus to be deployed when fresh economic forecasts are available at the next decision in September.
Draghi has predicted that euro-area growth will slow as a result of Brexit, suggesting a response is needed. Yet a major concern is how much further he can go with a stimulus package that already includes a 1.7 trillion-euro ($1.9 trillion) asset-buying program increasingly constrained by ultra-low debt yields.
U.K: U.K. retail sales had their biggest drop in six months in June, adding to signs that the vote to leave the European Union is starting to bite.
The volume of goods sold in stores and online dropped 0.9%, more than the 0.6% decline seen in a Bloomberg survey of economists, figures from the Office for National Statistics showed Thursday. Sales excluding auto fuel also fell a larger-than-expected 0.9%.
The statistics office carried out its monthly survey between May 29 and July 2, meaning some responses were received in the week following the June 23 Brexit referendum. A gauge of consumer confidence fell at the fastest pace in 21 years after the vote.
COMMODITIES: Oil rose for the second day in New York, extending its gain from a two-month low after U.S. crude stockpiles declined for a record ninth week and refining activity climbed to 2016 high.
September futures added 0.4% in New York after gaining 0.7% Wednesday. Inventories fell by 2.34 million barrels last week to 519.5 million, according to an Energy Information Administration report. Supplies remain more than 100 million barrels above the five-year average. Output rose for the second week and gasoline stockpiles gained on higher refinery rates.
Macro Economic Indicators
Inflation rate (Y-o-Y) for June 2016, 16.50%
Monetary Policy Rate current 12.00%
FX Reserves (Bn $) as at Jul 19, 2016, 26.346
Money Market Highlights
30 Day 16.9763
90 Day 17.9827
180 Day 19.3742
USD 1 Month 0.4853
USD 2 Months 0.5767
USD 3 Months 0.6971
USD 6 Months 1.0073
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 20-Oct-16 12.81
182d 19-Jan-17 16.22
364d 06-Jul-17 15.91
2y 30-May-18 15.10
3y 29-Jun-19 14.78
5y 13-Feb-20 15.36
Indicative Currency Exchange Rates
USDNGN 285.50 290.00
EURUSD 1.0915 1.1117
GBPUSD 1.3098 1.3299
USDJPY 106.04 106.07
USDCHF 0.98245 0.9926
GBPEUR 1.1879 1.2083
USDZAR 14.1960 14.3997
JPYNGN 277.4297 277.5303
CHFNGN 297.09 299.84
EURNGN 309.54 310.91
GBPNGN 371.39 372.70