01 November 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: The Nigerian National Petroleum Corporation on Monday said that there was a need to expand the country’s gas exploration efforts in its sedimentary oil and gas basins in order to increase the product’s reserve.
According to the corporation, out of a total of 209 oil and gas open acreages for allocation across different terrains in the country, 126 blocks are located in the North, 34 in Niger Delta, 12 in the Anambra Basin, and 37 are situated in the Dahomey Basin.
The Group Managing Director, NNPC, Dr. Maikanti Baru, stated that although the country currently had the largest proven gas reserve in Africa, the resource would be depleted in a couple of years if the country failed to shore up its reserve.
FX: Not much at the start of the week. Banks sent their acceptance/rejection letter to the CBN yesterday. Traded range for yesterday – $/NGN 304.50-380.00.
FIXED INCOME: Overall, spreads in bonds and T-bills are closing relatively flat. There were bearish sentiments in bonds but the sales were weak amidst a quiet session. Bill market saw some demand in the absence of an OMO auction. The demand was mostly on the short dates (November and December bills). O/N rates were quoted high at 40% because of funding for the FX forwards. Eventually closed between 15 – 20% as the debits for FX didn’t go through yesterday.
U.K: Bank of England Governor Mark Carney will extend his time in office by a year to 2019 to guide the economy through Britain’s split from the European Union.
Choosing a middle path between leaving in 2018 as planned or remaining until 2021 as entitled, Carney said in a letter to Chancellor of the Exchequer Philip Hammond that by staying until June 2019, he will help with an “orderly transition to the U.K.’s new relationship with Europe.”
The decision ends months of speculation about the 51-year-old Canadian’s future that raged as he led the charge to safeguard financial markets and the economy following June’s referendum.
U.S: The U.S. dollar is likely to drift higher into next year as the Federal Reserve forges a lone but gradual path toward higher interest rates, according to foreign exchange strategists polled by Reuters.
The run-up to and immediate aftermath of the U.S. presidential election on Nov. 8 could still pose some near-term risk to the currency, but a narrow range of forecasts among the bulk of the more than 60 participants surveyed on Oct. 26-31 suggests much of that has already been factored in.
The dollar unexpectedly rallied more than 3% in October, hitting a near nine-month high against a basket of currencies on the back of solid U.S. economic data.
COMMODITIES: An OPEC deal to cut oil output at a meeting this month is looking increasingly unlikely, with failure warranting prices in the low-$40s, according to Goldman Sachs Group Inc.
The Organization of Petroleum Exporting Countries is due to meet in Vienna to implement the first supply cuts in eight years and get other producers from outside of the group to join, notably Russia. Brent crude extended losses below $50 a barrel on Monday after weekend talks failed to yield concrete details on an accord to reduce the global crude surplus and stabilize prices.
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 27,2016, 23.947
Money Market Highlights
30 Day 19.2914
90 Day 20.4859
180 Day 21.6432
USD 1 Month 0.5326
USD 2 Months 0.6722
USD 3 Months 0.8859
USD 6 Months 1.2582
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 02-Feb-17 16.65
182d 04-May-17 19.64
364d 21-Sep-17 22.33
2y 30-May-18 18.78
3y 29-Jun-19 14.66
5y 15-Jul-21 14.96
Indicative Currency Exchange Rates
USDNGN 314.00 315.00
EURUSD 1.0858 1.1087
GBPUSD 1.2168 1.2371
USDJPY 105.70 105.10
USDCHF 0.98285 0.9930
GBPEUR 1.1065 1.1209
USDZAR 13.6139 13.8150
JPYNGN 2.9597 3.0603
CHFNGN 318.69 320.38
EURNGN 345.57 346.94
GBPNGN 400.35 401.75