11 May 2018, Sweetcrude, Houston, Texas — the Local and international financial market products and services updates.
NIGERIA: Nigeria will probably maintain its system of multiple exchange rates, which the International Monetary Fund has long-urged it to scrap, until at least early 2020, according to Moody’s Investors Service. Merging the naira’s various rates any sooner might force the government to weaken the currency and raise fuel prices, which would accelerate inflation, the rating company said. Nigerian monetary and fiscal authorities are likely to wait until investments in oil refineries and fertilizer plants, including by billionaire Aliko Dangote, reduce Nigeria’s imports of petroleum products.
FX: Improvement yesterday in the I&E window in terms of FX liquidity. Decent volumes were offered in the $/N 361 – 363 range. We believe turnover on the day was low as most of the buying interest were below $/N 361.50. Yesterday’s turnover printed at $181.57m and Wednesday at $500.37m support the rumours that CBN filled most bids submitted at the I & E window. We also expect FX retail auction to be announced today.
FIXED INCOME: In bonds, demand from locals continued and was in the 13.20% – 13.30% range. Bearish trend in bills as sustained, as the market had been pricing in another change in pattern at the OMOs.
All N454bn worth of bids across the two tenors were accepted, showing CBN reverting to what market is used to. Yields came in 5bps higher at 11.05% and 12.15% discount on the 119day and 231day bill respectively.
Market liquidity now closing roughly flat pending inflow of FX refunds. More selling in bills is expected to close the week as pressure on market liquidity increases.
U.K: Mark Carney’s window to raise interest rates before Brexit is closing.
As Britain draws nearer to its divorce from the European Union at the end of March with little certainty as to the economic repercussions, Bank of England policymakers with a benchmark interest rate of just 0.5% could be left with limited room to cut should they need to act.
There’s not much time to reload the arsenal. After voting 7-2 to leave interest rates unchanged on Thursday, policymakers are left with just seven meetings — and only three Inflation Reports — before the U.K.’s official departure date in which they could potentially push rates higher.
U.S: Donald Trump has spent his presidency breaking deals he inherited, confident he could do better. So far, it hasn’t worked.
Now, as the games out a historic summit with North Korea’s Kim Jong Un in Singapore next month, Trump is gambling he can do just the opposite: construct a complicated pact to dismantle Pyongyang’s nuclear program.
Trump’s negotiating record after almost 16 months in office shows him supremely confident and adept at making dramatic gestures and issuing hardball ultimatums.
COMMODITIES: Oil’s poised for a second weekly gain as geopolitical tensions surrounding the world’s biggest crude-producing region sparked concerns over tightening global supplies.
Futures in New York traded above $71 a barrel, near the highest level since November 2014, and are up 2.2% this week. Israel said it conducted the biggest raid in at least three decades at Iran’s military facilities inside Syria.
That added to tensions after U.S. President Donald Trump decided to exit a 2015 nuclear accord and hit the Persian Gulf state with sanctions, which could curb exports from OPEC’s third-largest producer.
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 May 07, 2018, 47,804
Money market Highlights
NIBOR (%)
O/N 23.8750
30 Day 13.6579
90 Day 14.6082
180 Day 16.3273
LIBOR (%)
USD 1 Month 1.92851
USD 2 Months 2.08186
USD 3 Months 2.35250
USD 6 Months 2.52019
USD 12 Months 1.72400
Benchmark Yields Tenor
Maturity Yield (%)
91d 09-Aug-18 12.77
182d 08-Nov-18 12.41
364d 04-Apr-19 13.95
2y 13-Feb-20 13.27
3y 15-Jul-21 12.40
5y 27-Jan-22 13.15
Indicative Currency Excange Rates
Bid Offer
USDNGN (I&E) 359.00 360.00
EURUSD 1.1834 1.2102
GBPUSD 1.3431 1.3656
USDJPY 109.69 109.75
GBPEUR 1.1328 1.1538
USDZAR 12.5494 12.7532
EURNGN 426.80 427.44
GBPNGN 487.08 490.50
