Financial market products & services update

*Financial markets.

16 February 2017, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: Annual inflation in Nigeria rose in January to 18.72 percent, the National Bureau of Statistics said on Wednesday, its 12th straight monthly increase. The rise from 18.55 percent in December, its highest in more than 11 years, was driven by surges in food, transport and electricity. A separate food index also rose, to 17.82 percent from 17.39 percent in December, the statistics office said. Galloping inflation comes as Africa’s largest economy grapples with its first recession in 25 years, largely caused by the fall in global oil prices since 2014. Crude oil sales account for 70 percent of government revenue. In December, President Muhammadu Buhari presented a record 7.298 trillion-naira ($23.97 billion) budget for 2017 aimed at stimulating growth and pulling the economy out of recession.

FX: Naira continues to be reported under severe pressure in the parallel market as offers for the greenback today fell at $/NGN 510.

FIXED INCOME: Auction day brought out sellers at the start particularly on the 2021s. Prints came in at 16.55% (-35bps), 16.612% (-38bps) and 16.77% (-22bps) on the 5, 10 and 20year. Extra N50bn was sold across the three tenors on bonds and additional N60bn was also sold on the 1year. Bill prints came in at 14.17% (-12bps), 18.75% (-12bps) and 22.61% (-14bps) on the 91, 182 and 364day.

CHINA: China ended a six-month streak disposing of its US Treasury holdings in December, adding to its position for the first time since last May as the country’s central bank seeks to manage capital flight. The country, which ceded its status as the world’s largest owner of haven Treasuries in October to Japan, added $9.1bn of US sovereign debt to its reserves in the final month of 2016, new data from the Treasury and Federal Reserve showed on Wednesday. In its effort to stem outflows, Beijing has tightened capital controls, including curbs on foreign acquisitions. Higher interest rates have also bolstered the attraction of keeping money onshore.

GREECE: Greece’s annual inflation rate accelerated to its highest level in nearly five years last month, as the economy made a stunning exit from three years of deflation and weak price growth. Greece’s inflation performance is in line with the inflationary upsurge seen across the eurozone in the last few months, with average consumer prices at a four-year high in the bloc at 1.8% in January. Higher inflation could prove problematic for the Greek economy, however, after a surprise contraction in growth at the end of last year. Rising prices for staples such as food and drink threatens to crimp consumers in an economy where unemployment is at 23% (see chart below). The figures come at a sensitive time for Greece’s economic future, as a fresh impasse between its creditors in the EU and the International Monetary Fund threatens to delay its next injection of rescue cash.

COMMODITIES: Oil held steady on Thursday, supported by ongoing supply cuts led by producer group OPEC while rising fuel inventories and crude production in the United States dragged on prices. Brent crude futures were trading at $55.74 per barrel at 0550 GMT (12:50 a.m. ET), down just 1 cent from their last close. U.S. West Texas Intermediate (WTI) crude futures dropped 6 cents to $53.05 per barrel.

Macro Economic Indicators

Inflation rate (Y-o-Y) for December 2016,      18.72%
Monetary Policy Rate current                            14.00%
FX Reserves (Bn $) as at Feb 14, 2017,            28,970

Money Market Highlights
O/N                               15.3750
30 Day                          16.9093
90 Day                          19.1748
180 Day                        23.1962
USD 1 Month             0.64500
USD 2 Months           0.72278
USD 3 Months           0.91233
USD 6 Months           1.21156
USD 12 Months         1.72400

Benchmark yields
Tenor       Maturity         Yield (%)

91d             25-May-17          15.15
182d           17-Aug-17           18.66
364d          01-Feb-18           21.84
2y               29-Jun-19          16.00
3y               13-Feb-20          16.42
5y               27-Jan-22          16.03

Indicative Currency Exchange Rates
Bid          Offer

USDNGN           314.50         315.00
EURUSD            1.0501         1.0703
GBPUSD            1.2370         1.2572
USDJPY             114.02         114.05
USDCHF            0.99965      1.0098
GBPEUR            1.1660         1.1864
USDZAR            12.8759       13.0793
JPYNGN            2.7097         2.8103
CHFNGN           312.44         314.13
EURNGN          338.92         340.28
GBPNGN          404.78         406.18

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