Financial market products & services update

*Financial markets.

13 April 2017, Sweetcrude, Lagos — The local and international financial market products and services update
NIGERIA: Nigeria’s central bank will soon resume selling large volumes of dollars on the spot market and make the U.S. currency available to foreign investors at an undisclosed rate so that they can repatriate dividends, it said. Oil-producing Nigeria has been gripped by a shortage of dollars since crude prices plunged, triggering a currency crisis that left foreign companies struggling to purchase hard currency and battered investor confidence. It lifted a temporary currency peg last year, but in order to protect its precariously low foreign reserves, it has introduced a convoluted exchange rate system that sees different buyers paying various rates for dollars. The policy has masked pressures on the naira and stunted hard currency inflows as investors struggle to price naira assets, according to analysts. “The (central bank) will soon … begin spot forex auction (and) open a special window for investors to trade freely … dividends and investment remittances,” the bank said in a statement dated on Tuesday.

FX: Results of the retail FX auction announced on Monday were released yesterday. In line with the recently amended CBN FX policy, FX allocation was distributed among the 7; 15 &30 day buckets. Still no 2-way interbank trading, trades were done within the range of $/NGN 305.60- 306.10.

FIXED INCOME: Haphazard close in bonds as the worsened liquidity condition spooked the market. The almost non-existent interest from buy-side clients at the bond auction aggravated things. Bond and bill market sold off aggressively. Jul 2021s were badly hit and traded at 16.50% (+60bps) while May and June’s bills traded at a high of 19% discount.

U.K: London’s housing market is in its worst slump since the depths of the financial crisis eight years ago, part of a broader slowdown that may continue.
The Royal Institution of Chartered Surveyors said its price balance for the city fell to the lowest since February 2009 last month. It declined to minus 49, indicating that a greater percentage of agents reported drops in March. Still, more respondents than not still expect prices in London to rise over the next year, the report showed.

U.S: U.S. Secretary of State Rex Tillerson and Russian Foreign Minister Sergei Lavrov vented disagreements after hours of talks in Moscow while signaling that neither side is giving up on improving relations soured by Russian hacking and deepening differences over Syria.
Tillerson’s first trip to Russia as the top U.S. diplomat was so freighted with tension that the Kremlin left uncertain whether President Vladimir Putin would snub the American visitor. In the end, Putin spent more than two hours with Tillerson and Lavrov on Wednesday before the diplomats emerged to tell reporters that efforts must be made to mend relations that have sunk to a dangerously low level.

COMMODITIES: Oil extended declines for a second day after the International Energy Agency said global inventories probably expanded in the first quarter, even as OPEC and its allies cut supply.
While output curbs by nations including Saudi Arabia and Russia have bought markets “very close to balance,” stockpiles still climbed because of supply increases before a six-month deal between the producers took effect Jan. 1, the IEA said in its monthly report. Futures in New York slid as much as 0.6% Thursday after falling on Wednesday for the first time in seven sessions amid rising U.S. output.

Macro Economic Indicators
Inflation rate (Y-o-Y) for March 2017 17.73%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at Apr 11, 2017, 30.393

Money Market Highlights
NIBOR (%)

O/N 166.7500
30 Day 18.5671
90 Day 21.6018
180 Day 23.0226
LIBOR (%)
USD 1 Month 0.99000
USD 2 Months 1.02722
USD 3 Months 1.15511
USD 6 Months 1.41544
USD 12 Months 1.72400

Benchmark Yields
Tenor Maturity Yield (%)

91d 13-Jul-17 19.00
182d 12-Oct-17 16.50
364d 22-Mar-18 18.35
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 1.0544 1.0746
GBPUSD 1.2453 1.2655
USDJPY 109.02 109.05
USDCHF 0.99865 1.0088
GBPEUR 1.1692 1.1897
USDZAR 13.4396 13.6430
JPYNGN 2.7497 2.8503
CHFNGN 303.53 305.32

About the Author