20 October 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: Nigeria’s overnight interbank rate crashed on Wednesday to around 20% from 150% after the central bank sold less hard currency than expected at a special auction, traders said. “The central bank has released the result of the auction, but the amount sold fell short of market expectations,” one dealer said, without giving details. The interbank rate fell after the auction as banks had now more surplus liquidity from funds not used to buy hard currency, dealers said. Banks had been required to fund their accounts to participate in the auction, causing the cost of borrowing to soar.
FX: USDNGN traded the range $/NGN 305.00 – 315.00 Yesterday. The results of the CB special auction was released yesterday on a two month forward basis.
FIXED INCOME: The market was totally different yesterday, both T-bills and Bond rallied off the back of liquidity release following the release of the FX intervention auction result by CBN. Market could interpret from the result that CBN didn’t sell to all the bids submitted. O/N immediately dropped to and closed at 20%, average t-bill yields dropped by 50bps to close at 19.21% and average bond yields dropped by 10bps to close at 15.10%.
U.S: The dollar strengthened versus all of its major peers ahead of a European Central Bank policy meeting, while European stocks retreated and Asian shares advanced. Mexico’s peso touched a six-week high after the final U.S. presidential debate.
The Bloomberg Dollar Spot Index rose for the first time this week as the euro reached its weakest level since July ahead of the ECB meeting, which may shed light on the outlook for the authority’s record stimulus. Australia’s dollar slumped following an unexpected drop in employment and the peso, which tends to appreciate when Donald Trump’s U.S. election prospects dim, fluctuated.
E.U.: Instead of expanding stimulus just now, Mario Draghi might settle for keeping up the suspense surrounding it.
Quantitative easing is currently scheduled to end in March, stoking scrutiny of the European Central Bank president for any guidance about the future path of monetary policy. Economists surveyed by Bloomberg predict he is unlikely to announce fresh measures before December, even though growth remains feeble and consumer prices still closer to zero than the ECB’s goal.
Before Thursday’s Governing Council meeting, policy makers have signaled that they’re willing to extend the program before gradually phasing it out once inflation approaches 2%.
COMMODITIES: Oil held near the highest close in 15 months after government data showed U.S. crude stockpiles unexpectedly declined last week, trimming an overhang of inventories.
Futures slid 0.6% in New York after advancing 2.6% Wednesday to settle at the highest since July 2015. Crude supplies dropped by 5.25 million barrels to the lowest level since January, according to an Energy Information Administration report. All 10 analysts surveyed by Bloomberg had forecast a gain. Many nations are willing to join OPEC in cutting production, according to Khalid Al-Falih, energy and industry minister of Saudi Arabia.
Macro Economic Indicators
Inflation rate (Y-o-Y) for September 2016, 17.90%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at Oct 14,2016, 23.955
Money Market Highlights
30 Day 20.9551
90 Day 21.2239
180 Day 23.2139
USD 1 Month 0.5257
USD 2 Months 0.6611
USD 3 Months 0.8812
USD 6 Months 1.2607
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 19-Jan-17 14.05
182d 20-Apr-17 18.35
364d 21-Sep-17 22.29
2y 30-May-18 18.72
3y 29-Jun-19 14.64
5y 15-Jul-21 14.88
Indicative Currency Exchange Rates
USDNGN 314.00 315.00
EURUSD 1.0872 1.1075
GBPUSD 1.2167 1.2369
USDJPY 103.62 103.66
USDCHF 0.98415 0.9943
GBPEUR 1.1078 1.1283
USDZAR 13.8306 14.0339
JPYNGN 3.0497 3.1503
CHFNGN 319.02 320.71
EURNGN 352.96 354.32
GBPNGN 400.35 401.75