Financial market products & services update

*Financial markets.

11 April 2017, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: The Association of Bureaux de Change Operators of Nigeria (ABCON) has called on the Central Bank of Nigeria (CBN) to review the margin allowed to sell to customers from N2 to N10 and also increase foreign exchange (FX) allocation given to the sub-sector weekly.
The acting President, ABCON, Alhaji Aminu Gwadabe said this at an emergency meeting with Managing Directors/Chief Executive Officers of BDCs in Lagos yesterday.
However, Gwadabe and other operators at the meeting applauded the central bank for its improvement in supply, which saw BDCs receive $20,000 last week. But they argued the margin they are allowed to sell to end users at N2 was too small. Gwadabe said: “We have told the regulators that margin is small. The margin of N2 is too small the CBN should review that margin to at least N10 per dollar.”

FX: CBN yesterday held two back-to-back FX forward auctions, one as wholesale (single bid per bank) with $100m on the offer and the other as retail (Multiple client bids and amount on offer unknown). Our estimate for last week auction is circa $768m (retail and wholesale)

FIXED INCOME: Main activity in bonds was on the Mar 2036s and was skewed to the buyers. The double FX auction announced by CBN caused the selloff in bills and later affected the tone in bonds. With current situation (money market opened short N90bn) being worsened by funding for FX, market will easily swallow up Thursday’s N80bn OMO maturity. We expect this pressure on money market liquidity to persist.

U.K: U.K. inflation’s upward trajectory paused in March as the timing of Easter led to a drop in airfares, offsetting increases in the price of food and clothing.
While the rate was unchanged compared with February, at 2.3%, that’s still up from just 0.5% a year ago. The increase over the past year reflects higher fuel costs and the pound’s decline since the Brexit vote in June.
On the month, prices rose 0.4%, the Office for National Statistics said. Airfares fell 4%, compared with a 23% jump a year earlier, when the Easter holiday fell in March.

U.S: The U.S., Gulf states and European allies projected their unified opposition to Russia’s backing of Syrian President Bashar al-Assad with an emergency meeting on the sidelines of a Group of Seven gathering Tuesday.
While no readout was immediately available from the hour-long meeting, the goal was to arm Secretary of State Rex Tillerson with a single, strong message for Russian leaders when he travels to Moscow later Tuesday in the first visit by a U.S. Cabinet official since President Donald Trump took office in January.
The U.S. and European nations are mulling new Syria-related sanctions that could punish Russia for its military backing of Assad’s regime. Late Monday, Trump and U.K. Prime Minister Theresa May said Tillerson’s visit to Moscow is a chance to persuade Russia to cut its support for the Syrian regime.

COMMODITIES: Oil traded near $53 a barrel after the longest winning streak since December before U.S. government data forecast to show record crude stockpiles declined.
Futures slid 0.4% in New York after rising 5.7% in the previous five sessions. Inventories probably dropped by 1.5 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. Libya declared force majeure at a key export terminal as its biggest field stopped producing just a week after it reopened.
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Macro Economic Indicators

Inflation rate (Y-o-Y) for February 2017     17.78%
Monetary Policy Rate current                        14.00%
FX Reserves (Bn $) as at Apr 07, 2017         30.366

Money Market Highlights
O/N                            19.5417
30 Day                       16.9083
90 Day                       20.9593
180 Day                     22.7392
USD 1 Month           0.99000
USD 2 Months        1.02611
USD 3 Months        1.15761
USD 6 Months        1.42961

Benchmark Yields
Tenor       Maturity       Yield (%)
91d             13-Jul-17          18.40
182d          12-Oct-17          18.01
364d         22-Mar-18        22.32
2y              29-Jun-19        15.79
3y             13-Feb-20         15.78
5y             15-Jul-21           15.83

Indicative Currency Exchange Rates
                              Bid       Offer
USDNGN           314.50     315.00
EURUSD            1.0499    1.0701
GBPUSD            1.2311      1.2513
USDJPY             111.66      110.69
USDCHF           1.00235   1.0125
GBPEUR           1.1608      1.1811
USDZAR           13.8110    14.0147
JPYNGN           2.7097      2.8103
CHFNGN          302.51      304.20

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