A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.

12 April 2018, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: Nigeria’s inflation decelerated for a 14th consecutive month in March.

Consumer-price growth in Africa’s most-populous nation slowed to 13.3% from 14.3% in February, Statistician-General Yemi Kale said Thursday on his Twitter account. The median estimate in a Bloomberg survey was 13.6%. Prices rose 0.8% in the month.

The cost of gasoline climbed to an average 9.4% inairasch to 163.4 nairas ($0.gallonsliter (0.3 gallon) from a year earlier, according to the statistics bureau, whose data includes unofficial pump prices. Nigeria currently caps gasoline retail prices at 145 naira per liter.

FX: Trading pattern unchanged in the I&E window. Not much going through the interbank channel as most flows are well matched between DMB’s and their clients. Traded range as stated on the FMDQ site is 350-361.25. Yesterday’s turnover stood at $242.92m.

The NIFEX keeps printing new highs $/N 337.39 and consequently narrowing the spread to NAFEX $/NGN 360.00. Premium between the two fixings now at 22.61.

FIXED INCOME: Bond market came alive yesterday with pockets of demand seen in early trading. Lower inflation prints today were being priced into bonds at open yesterday. In bills, there were sellers of the short dates in anticipation of today’s OMO which will drain liquidity.

The money market expected to be boosted by FX refunds and maturities. We expect a huge portion of this will be mopped up via OMOs and CBN continuing the trend of lower stop rates.

U.K: The U.K property market is wilting from lack of demand, leaving home prices unchanged for a second month in March.

The Royal Institution of Chartered Surveyors said its gauge of prices remained at zero, with declines in London and the southeast being offset by gains in the East Midlands, Northern Ireland and Wales.

Years of rampant price gains have stretched affordability in London, where demand from buyers continued to fall in March. Property in the capital has also been roiled by tax changes and the country’s decision to leave the European Union, and estate agents reported an increase in the number of homes being withdrawn from sale.

CHINA: China’s commerce ministry said on Thursday trade negotiations with the United States would be impossible as Washington’s attempts at dialogue were not sincere, and vowed to retaliate should U.S. President Donald Trump escalate current tensions.

China President Xi Jinping on Tuesday vowed to open China’s economy further and lower import duties on goods such as cars, which had boosted hopes for a compromise. Trump responded in a tweet saying he was “thankful” for Xi’s remarks on tariffs and access for U.S. automakers, and said both countries would “make great progress together”.

COMMODITIES: Escalating geopolitical risks in the Middle East are proving to be a boon for oil prices, with speculation over supply disruptions in the energy-rich region countering concerns over rising U.S. crude stockpiles.

Futures in New York increased as much as 0.8% after jumping 2% on Wednesday to the highest level since 2014. Saudi Arabia, the world’s biggest oil exporter, intercepted a ballistic missile fired by pro-Iranian Yemeni rebels over the kingdom’s capital just hours after President Donald Trump warned America is preparing to strike Syria. Meanwhile, investors largely shrugged off a U.S. government report showing a surprise gain in nationwide crude inventories.

Macro Economic Indicators
Inflation rate (Y-o-Y) for March 2017           13.34%
Monetary Policy Rate current                        14.00%
FX Reserves (Moving Avg Bn $) as at April 09, 2018,    46.753

Money Market Highlights
NIBOR (%)
O/N                        3.2500
30 Day                 13.4326
90 Day                 14.2496
180 Day               15.5342
LIBOR (%)
USD 1 Month       1.89713
USD 2 Months     2.02225
USD 3 Months     2.33746
USD 6 Months     2.45380
USD 12 Months   1.72400

Benchmark Yields
Tenor       Maturity      Yield (%)

91d          12-Jul-18       13.19
182d        04-Oct-18      13.75
364d       14-Mar-19      15.41
2y           13-Feb-20      13.44
3y           15-Jul-21        13.42
5y           27-Jan-22       13.50

Indicative Currency Exchange Rates
Bid      Offer

USDNGN (I&E)     359.00    360.50
EURUSD                1.2207    1.2405
GBPUSD                1.3908    1.4264
USDJPY                 106.99    107.02
GBPEUR                1.1391    1.1595
USDZAR               11.9778   12.2500
EURNGN               440.49    444.86
GBPNGN               504.50    510.90

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