24 October 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: The Federal Government has appealed to the African Development Bank to fast-track the $1bn loan facility it promised as support for the implementation of Nigeria’s 2016 budget.
According to the government, the loan is expected to cover the 35% shortfall in the budget.
The Minister of Budget and National Planning, Senator Udo Udoma, made the appeal in Abuja during a meeting with the AfDB team.
Udoma, while giving an overview of the government’s plan to boost the economy and spend out of the current recession, said that the Federal Government was trying to contain the militancy in the Niger Delta as the development had negatively affected oil production. He said the government was hoping to restore production to 2.2 million barrels per day at the end of the year.
FX: Market has seen the CB last week selling 2-month forwards to targeted sectors via a special auction. We estimate the size to be about $320m – $500m with a range of $/NGN 310.00 – 360.00, based on information available.
FIXED INCOME: Friday had a quiet day in bonds. Volumes were virtually unchanged from the previous trading day with little or no client enquiries. T-Bill market saw some buying as recent CBN action in FX and approved FAAC brings some liquidity to support demand. We expect that the anticipated inflow from FAAC will keep buyers full of zip this week.
JAPAN: The Bank of Japan’s decision to reinstate a yield curve and calm market swings has left bond investors with a simple way of making a profit.
Carry and roll down, which involves buying a long-dated bond and making money as its value converges to par when maturity is approached, is a strategy whose profits can be wiped out by market turbulence. A measure of volatility has plunged to levels unseen since mid-January before the announcement of a negative interest-rate policy roiled markets.
U.K: A debate about the future of the Bank of England governor may be the last thing U.K. markets need.
Amid uncertainty about Britain’s relationship with the European Union, Mark Carney has been hailed as a source of stability even as he faces renewed political criticism. But with a self-imposed year-end deadline to decide how long he’ll stay at the BOE that security could be shaken.
Carney’s choice could have repercussions for the battered pound, down 18% since the EU referendum, and U.K. government bonds. The governor, who addresses lawmakers on Tuesday and begins a crucial set of policy meetings a day later, was quick to respond with stimulus to cushion the U.K. from a Brexit fallout as the country absorbed the result and the prime minister resigned.
COMMODITIES: Oil halted its advance near $50 a barrel as Iraq threatened to derail OPEC’s plan to stabilise crude markets by saying it should be exempt from planned output cuts.
Prices slid as much as 0.9% in New York after rising 0.4% Friday. Iraq should be exempted from trimming production because it’s embroiled in a war with Islamic militants, Oil Minister Jabbar Al-Luaibi said Sunday at a news conference in Baghdad. Rigs targeting crude in the U.S. rose for an eighth week to the highest level since February, according to Baker Hughes Inc.
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 20,2016, 23.901
Money Market Highlights
30 Day 19.1599
90 Day 19.9051
180 Day 22.0644
USD 1 Month 0.5340
USD 2 Months 0.6672
USD 3 Months 0.8817
USD 6 Months 1.2571
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 19-Jan-17 16.18
182d 20-Apr-17 17.33
364d 21-Sep-17 21.68
2y 30-May-18 18.39
3y 29-Jun-19 14.65
5y 15-Jul-21 14.95
Indicative Currency Exchange Rates
USDNGN 314.00 315.00
EURUSD 1.0779 1.0981
GBPUSD 1.2110 1.2312
USDJPY 103.82 103.85
USDCHF 0.98865 0.9988
GBPEUR 1.1121 1.1325
USDZAR 13.8461 14.0510
JPYNGN 2.9797 3.0803
CHFNGN 319.02 320.71
EURNGN 352.96 354.32
GBPNGN 400.35 401.75