23 November 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Nigeria’s central bank kept its main interest rate on hold on Tuesday for the second month in a row, as Africa’s biggest economy contends with its first recession in 25 years due to low oil prices combined with high inflation. Prices for oil, Nigeria’s main export, have languished in the last few years, while inflation accelerated to a more than 11-year high of 18.3 percent in October, creating the conditions for stagflation – low or no growth combined with high prices. Governor Godwin Emefiele said the decisions to keep the benchmark interest rate at 14 percent and keep cash reserve ratios for commercial banks at 22.5 percent were agreed by all 10 members of the Monetary Policy Committee present. The rate decision comes a day after data showed the recession was deepening, with Nigeria’s gross domestic product contracting in the third quarter by 2.24 percent year-on-year.
FIXED INCOME: After yesterday’s weak economic data, there was demand for bonds from locals as the post-auction selloff was clearly overdone. There was demand for bonds from locals as the post-auction selloff was clearly overdone. The bill market continued with the bullish run in the absence of any Open Market Operation (OMO). The MPC left all parameters unchanged .
FX: USD/NGN traded the range $/NGN 304.50 – 315.50 yesterday.
U.K.: Philip Hammond is due to announce the first fiscal statement since the U.K.’s vote to leave the European Union in June, which will give investors insight into the government’s economic policies. One-week volatility for the pound versus the dollar, a measure of anticipated price swings derived from options prices, rose to as high as 10.2 percent, compared with its close of 9.3 percent on Monday.
E.U.: German two-year bonds yields slid to a record low, as the securities were buoyed by the European Central Bank’s commitment to support the economy through its extraordinary stimulus measures. Two weeks before officials meet to set policy, traders are focused on whether the ECB will tweak its 80-billion euro ($85 billion) monthly program to ensure it doesn’t run out of securities to buy. Two-year notes are on an eight-day run of gains, as they also draw support from increased demand for German bonds as collateral, which pulls down funding rates.
COMMODITIES: Technical experts from OPEC member countries met in Vienna this week, some members continued to resist Iran and Iraq’s argument that they should be exempt from reducing output. The technical committee proposed that all members except Nigeria and Libya reduce their output by between 4 and 5 percent. Brent for January settlement traded at $48.99 a barrel on the London-based ICE Futures Europe exchange, down 13 cents.
Macro Economic Indicators
Inflation rate (Y-o-Y) for October 2016, 18.30%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at Nov 21,2016, 24.457
Money Market Highlights
NIBOR (%)
O/N 13.6500
30 Day 16.8809
90 Day 20.6637
180 Day 22.5380
LIBOR (%)
USD 1 Month 0.56778
USD 2 Months 0.71056
USD 3 Months 0.91983
USD 6 Months 1.27433
USD 12 Months 1.06675
Benchmark Yields
Tenor Maturity Yield (%)
91d 02-MAR-17 17.76
182d 01-JUN-17 20.10
364d 02-Nov-17 22.61
2y 27-Apr-18 20.08
3y 29-Jun-19 15.37
5y 15-Jul-21 15.69
Indicative Currency Exchange Rates
Bid Offer
USDNGN 314.50 315.00
EURUSD 1.0501 1.0703
GBPUSD 1.2276 1.2478
USDJPY 111.04 111.07
USDCHF 1.00725 1.0174
GBPEUR 1.1573 1.1777
USDZAR 13.9723 14.1757
JPYNGN 2.7897 2.8903
CHFNGN 323.22 324.91
EURNGN 345.57 346.94
GBPNGN 400.35 401.75