Financial market update

08 March 2013, Sweetcrude, Lagos – Local and international financial market update.

NIGERIA: Nigeria’s budget deficit in the 2013 budget passed last month is set to fall to 1.85 percent of gross domestic product, the director general of the budget office said on Thursday, from 2.97 percent in last year’s budget. Nigerian President Goodluck Jonathan approved a 4.99 trillion naira ($32 billion) budget last month, after it was passed by parliament, ending two months of disputes over the spending plans.

EUROPE: The euro held onto gains early in Asia on Friday, having posted its second biggest one-day rally this year, after the European Central Bank wrong footed investors who had positioned for a more dovish signal from ECB President Mario Draghi. The euro was at $1.3107 not far from a high of $1.3119 set overnight, after Draghi played down the threat of contagion to other euro members stemming from a political stalemate in Italy.

INDIA: The Indian government has sought parliament’s approval to spend an additional 247.74 billion rupees ($4.54 billion) on oil subsidies in the current fiscal year that ends in March. New Delhi expects the total spending on oil subsidies for the year to be 968.8 billion rupees.

CHINA: China’s exports soared past forecast to jump by a fifth in February from a year ago, a sign the country’s modest economic revival is intact and suggesting global demand may also be on the mend. Exports rose 21.8 percent in February from a year earlier and were 20.6 percent higher on a calendar adjusted basis. Export growth to the United States was the strongest in a year and to the eurozone it was the highest in 18 months.

Bonds – Bonds are still selling off in the markets. Yields up 24bps on the 16.39% JAN 22s and 34bps on the 15.10% APR 17s bps in the biggest moves of Thursday. As yields begin to look interesting again we are already seeing some offshore interest begin to come back into the markets.

Bills – Rates are up 40bps across the maturities yesterday in reaction to the spike at Wednesday’s primary auction. The CBN took the opportunity to sell an extra N50billion on the 364day bill which as suspected led to the spike in the rate at the auction. There was an OMO offering yesterday of N300billion but failed to make any sales due to technical issues.

Money Market – OBB and unsecured O/N rates eased to 10.10% and 10.15% yesterday. Market is being kept liquid by OMO maturities.

Indicative Currency Exchange Rates

Commodities

Brent futures fell below $111 a barrel on Friday as a restart of a crucial North Sea pipeline weighed on prices, with forecast-beating Chinese exports helping stem further losses.

Fx

                           Hi                Low            Close          Prev.Close

USD/NGN   156.25/35   157.54/64   157.65/75   158.00/10