Financial market products & services update

*Financial markets.

*Financial markets.

24 August 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Nigeria’s central bank has suspended nine banks from the interbank currency market for failing to remit money owed to the government, reports stated on Tuesday. The suspension comes after the central bank tightened restrictions on the flow of dollars to domestic lenders in March. That has forced the banks to delay hard-currency loan and trade repayments and increased their risk of default. The banks have failed to remit $2.1 billion, the government’s share of dividends from the state-owned gas company, NLNG. The banks were supposed to pay the money into the government’s account at the central bank. Last year, President Muhammadu Buhari ordered the merger of state accounts into that one account at the central bank to reduce corruption.

FX: NIFEX printed higher on the day at $/NGN 335.25. The previous print was $/NGN 329.50.

FIXED INCOME: More of the same yesterday. The tone in both bonds and bills remained firm. There were whispers that offshore interest was behind the move on the March 2036s. We still expect demand to persist in both bills and bonds but buying will remain cautious in case of any surprise OMO auction. The expectation is also for the July FAAC allocations to be approved soon.

CHINA: China’s central bank injected cash into the financial system using 14-day reverse-repurchase agreements for the first time since February amid speculation policy makers are looking to increase the use of more expensive, longer-term funding to cool a bond rally. The People’s Bank of China auctioned 50 billion yuan ($7.5 billion) of the contracts in open-market operations at 2.4 percent Wednesday, according to a statement made. The central bank also offered 90 billion yuan of seven-day reverse repos at 2.25 percent. Both rates were unchanged from previous sales.

U.K.: The UK’s manufacturing output eased back in the three months to August, according to the latest industrial trends survey from the CBI. Manufacturing grew at a slower rate than in the three months to July. But the sector was still expanding at a much much faster rate than in the spring when there was hardly any growth at all. The CBI’s survey of 505 firms found that export orders had been boosted by this year’s devaluation of the pound. Anna Leach, the CBI’s head of economic analysis and surveys, said: “It’s good to see manufacturing output growth coming in stronger than expected, and some signs that the fall in sterling is helping to bolster export orders.

COMMODITIES: Oil resumed its drop after industry data showed U.S. stockpiles rose, keeping inventories at the highest seasonal level in at least 30 years as peak summer demand in the world’s largest consumer of the fuel nears its end. Brent for October settlement lost as much as 89 cents, or 1.8 percent, to $49.07 a barrel on the London-based ICE Futures Europe exchange.

Macro Economic Indicators
Inflation rate (Y-o-Y) for June 2016,           16.50%
Monetary Policy Rate current                       14.00%
FX Reserves (Bn $) as at Aug 22, 2016,      25.668

Money Market Highlights

O/N                              20.2800
30 Day                         16.6456
90 Day                         17.7467
180 Day                       19.6422
USD 1 Month             0.5222
USD 2 Months           0.6473
USD 3 Months           0.8254
USD 6 Months           1.2290
USD 12 Months         1.06675

Benchmark Yields
Tenor         Maturity         Yield (%)

91d                17-Nov-16          14.89
182d             16-Feb-17           17.36
364d             03-Aug-17         19.50
2y                  27-Apr-17          18.02
3y                  29-Jun-19         14.97
5y                  15-Jul-21           14.92

Indicative Currency Exchange Rates
Bid         Offer

USDNGN     334.20        335.85
EURUSD      1.1179         1.1381
GBPUSD      1.3131         1.3333
USDJPY       100.18        100.21
USDCHF      0.95905    0.9692
GBPEUR      1.1629        1.1833
USDZAR      13.9254     14.1288
JPYNGN      314.3997   314.5003
CHFNGN     346.86      348.54
EURNGN     377.46      378.82
GBPNGN     442.77       444.17

About the Author