Financial market products & services update

*Financial markets.

13 March 2017, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: The steady rise of Nigeria’s foreign exchange earnings and build-up of external reserves, which started about five months ago, is already under threat from exogenous shock arising from the recent fall in oil prices.
Nigeria depends on oil sales for 90% of its foreign exchange earnings and 70% of total revenue.
However, rising shale oil production in the United States in recent months has dampened production cuts carried out by members of the Organisation of Petroleum Exporting Countries (OPEC) and Russia to shore up prices.

FX: The CBN held an FX wholesale auction last week with $100m on offer for forwards not exceeding 60 days. Results of the auction was released to the individual banks and we estimate the full amount offered was sold.
FIXED INCOME: Quiet end to last week. There was some demand for bills on Friday whilst we saw a few sales in bonds mostly on the June 19s. Besides that there was very minimal activity. At the OMO auction, same tenors as Thursday were offered (168day and 322day), prints unsurprisingly unchanged. This week will be dominated by the auctions. February inflation prints to be released Mar 15 – some easing is expected as the base effects starts to kick in.

COMMODITIES: Oil extended its decline below $50 a barrel as U.S. drillers continued to boost activity, countering OPEC’s efforts to drain a global glut.
Futures in New York headed for a sixth day of losses, dropping as much as 1.2% after falling 9.1% last week. Rigs targeting crude in the U.S. rose to the most since September 2015, according to Baker Hughes Inc. In Libya, crude production dropped 11% as clashes among rival armed groups led to the closure of some of the OPEC nation’s biggest oil export terminals.

CHINA: A year ago, the Federal Reserve was forced to back away from its earlier projection for four interest-rate increases in 2016. This year, everyone’s coming around to the Fed’s view.
A Bloomberg survey of 45 economists conducted on March 7-8 produced a median estimate for three quarter-point hikes in 2017, with moves expected in March, June and December. That’s up from two hikes that respondents predicted in a survey in February and now matches the median number of increases that Fed policy makers forecast in December.
Investors also raised their sights recently. The probability of three or more increases this year implied by pricing on contracts in fed funds futures surged above 50% for the first time on March 1.

U.K: U.K. house prices rose at their fastest pace in a year last month as high-value London property showed signs of a rebound.
The 0.6% increase in values lifted the average to 297,832 pounds ($362,000), Acadata and LSL said in a report on Monday. Nevertheless, annual price growth softened for a 12th month, to 2.4%, the lowest since 2013.
According to regional data for January, London home prices gained 0.4% from December, snapping a two-month decline, and gains in the high-value areas of the capital contributed to the increase in February. The city’s property market “still faces challenges,” Acadata said, noting that the annual gain in prices was the weakest in almost five years and transactions have slumped 22% over the past three months compared with a year earlier.

Macro Economic Indicators
Inflation rate (Y-o-Y) for January 2017    18.72%
Monetary Policy Rate current                     14.00%
FX Reserves (Bn $) as at Mar 09, 2017     30.038

Money Market Highlights

O/N                         13.9833
30 Day                    16.7115
90 Day                    19.9487
180 Day                  23.2374
USD 1 Month        0.89056
USD 2 Months      0.95833
USD 3 Months      1.12122
USD 6 Months      1.42600
USD 12 Months    1.72400

Benchmark Yields
Tenor        Maturity      Yield (%)

91d              08-Jun-17       16.23
182d           17-Sep-17         19.69
364d           01-Mar-18       22.35
2y                29-Jun-19       15.67
3y                13-Feb-20       16.01
5y                15-Jul-21         16.19

Indicative Currency Exchange Rates
Bid         Offer

USDNGN    314.50        315.00
EURUSD     1.0572        1.0774
GBPUSD      1.2114        1.2318
USDJPY       114.57        114.60
USDCHF      1.00255    1.0127
GBPEUR      1.1344       1.1546
USDZAR      13.0058    13.2092
JPYNGN      2.6997       2.8003
CHFNGN     311.51        313.20
EURNGN     333.36      334.72
GBPNGN     381.96      383.35

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