17 October 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: Annual inflation in Nigeria accelerated in September to 17.9%, a more than 11-year high and the eighth monthly rise in a row, highlighting the economic crisis in Africa’s most populous nation. The rise from 17.4% in August reflected higher prices for electricity, kerosene, transport and food, a separate index for which rose to 16.6% from August’s 16.4%, the National Bureau of Statistics (NBS) said on Friday. “During the month, the highest increases were seen in clothing materials, shoes, books and stationeries,” the NBS said in a statement. Nigeria, Africa’s biggest energy producer, has seen its economy slide into recession for the first time in 25 years, largely due to the impact of low oil prices.
FX: USDNGN traded the range $/NGN 304.50 – 345.00 on Friday. The CB offered a special intervention on Friday and the results is expected today.
FIXED INCOME: It was a roller coaster end for last week. The rally in the short dated t-bills totally reversed because CBN sold 152bn 22jun17s OMO bill on thursday and they also offered 2 months FX forwards with same day funding on Friday to clear some outstanding demands from airline, manufacturing and agricultural companies, both actions caused market to sell off reversing the yield movement. Bond market was not left out in the selloff, bonds that were just won at the week’s auction were sold off to create liquidity.
E.U.: Mario Draghi will have to go the extra mile on quantitative easing before he can think of slowing down, economists say.
With consumer prices barely rising and the recovery still fragile, the majority of respondents in a Bloomberg survey predict the European Central Bankpresident will prolong bond-buying. That decision is more likely to be taken in December than at this week’s policy meeting, and most analysts say the program won’t start to be wound down until the second half of 2017. Even then, the ECB is only expected to act if euro-area inflation is holding above 1.5%.
U.K: Bank of England Deputy Governor Ben Broadbent said the pound’s slump since the U.K. vote to quit the European Union will help the economy overcome shocks from the decision.
Sterling is down about 18% since the vote on June 23 and is the worst performer this year among a basket of major currencies. Its rapid decline has prompted commentary from a number of BOE policy makers in the past week, including Governor Mark Carney, who said he’s not indifferent to its level.
Asked on BBC radio if the BOE would intervene if the pound got too weak, Broadbent said the flexibility of the exchange rate is an important cushion for the economy.
COMMODITIES: Oil extended declines after U.S. producers increased drilling as the market contends with an overhang of crude inventories at the highest seasonal level in at least three decades.
Futures lost as much as 0.7% in New York after slipping 0.2% Friday. Rigs targeting crude rose for a seventh week to the highest since February, Baker Hughes Inc. said on its website. That followed the first gain in U.S. inventories in six weeks. The output from OPEC’s Libya expanded to 560,000 barrels a day, according to a National Oil Corp. official, compared with a reported production rate of 540,000 a barrel per day last week.
Macro economic Indicators
Inflation rate (Y-o-Y) for September 2016, 17.90%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at Oct 13,2016, 24.187
Money Market Highlights
30 Day 19.2987
90 Day 20.0688
180 Day 22.1379
USD 1 Month 0.5356
USD 2 Months 0.6578
USD 3 Months 0.8816
USD 6 Months 1.2622
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 05-Jan-17 17.60
182d 13-Apr-17 18.42
364d 21-Sep-17 22.34
2y 30-May-18 18.73
3y 29-Jun-19 14.65
5y 15-Jul-21 15.01
Indicative Currency Exchange Rates
USDNGN 314.00 315.00
EURUSD 1.0876 1.1078
GBPUSD 1.2059 1.2261
USDJPY 104.23 104.24
USDCHF 0.98465 0.9948
GBPEUR 1.0975 1.1179
USDZAR 14.2645 14.4680
JPYNGN 2.9697 3.0703
CHFNGN 319.02 320.71
EURNGN 352.96 354.32
GBPNGN 400.35 401.75