28 March 2017, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: Nigeria is likely to pass the 2017 budget into law before May, a lawmaker who chairs a committee on the spending plans in the upper chamber of parliament said on Monday. The budget lays out plans to pull Africa’s largest economy out of its first recession for 25 years, largely prompted by low global prices for the oil it produces and the impact of attacks on energy facilities in its Niger Delta oil hub in 2016. President Muhammadu Buhari, who has faced rising disenchantment over his handling of Nigeria’s economy, presented his record 7.298 trillion naira ($23.2 billion) budget to lawmakers in December. It must be agreed by lawmakers before the president can sign it into law. Senator Danjuma Goje, who chairs the budget appropriation committee in the Senate, said last year’s budget.
FX: We estimate about $1.3bn of CB forwards will be maturing in April -May 2017. NGN continues to appreciate in the parallel market space.
FIXED INCOME: Surprisingly soft start to the week in bonds. Real money accounts where whispered to have sold. T-Bill market remains subject to the pressure the FX auctions are putting on money market liquidity. Overall, activity in bills was also skewed to the sellers. Participation at the OMOs remains lukewarm as funding for FX remains priority. Total demand was N43bn and stop rates were unchanged. We expect to see demand creep back into bonds today.
COMMODITIES: Saudi Arabia slashed the tax rate paid by state oil producer Saudi Aramco, a key milestone in preparing the company for what may be the world’s biggest initial public offering.
Aramco’s income tax, paid on the company’s profit, is being cut to 50% from 85%, Chief Executive Officer Amin Nasser said in an emailed statement. The centerpiece of plans to overhaul the economy of the world’s largest oil exporter, Saudi Arabia aims to sell as much as 5% of the company late next year in an IPO that the kingdom estimates could value the business at about $2 trillion.
U.S: Federal Reserve Bank of Chicago President Charles Evans said two interest-rate increases may be the right amount of tightening for the U.S. economy this year given the uncertainty surrounding the outlook for inflation and government spending.
“To the extent that I gain more confidence in the forecast I have, that would be a good indicator that I could perhaps support three,” Evans said Monday in a Bloomberg Television interview from Madrid with Michael McKee. “Two might be the right number if there’s a little bit more uncertainty.”
CHINA: China has asked banks and financial institutions to increase their lending to the manufacturing sector as policy makers seek to bolster stimulus in the wider economy.
Banks should provide more medium-term credit to enhance manufacturers’ technology, especially for smaller enterprises, according to a guideline jointly issued by the People’s Bank of China, Ministry of Industry and Information Technology and three financial regulators Tuesday. Officials encouraged lenders to set up specific departments for manufacturers and to apply different lending criteria to companies that use advanced technologies.
The guideline is part of policy makers’ serial campaign to steer speculative funds away from the real estate market and toward supporting the real economy.
Macro Economic Indicators
Inflation rate (Y-o-Y) for February 2017, 17.80%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at Mar 24, 2017, 30.340
Money Market Highlights
30 Day 16.9053
90 Day 21.4365
180 Day 23.5139
USD 1 Month 0.98278
USD 2 Months 1.02278
USD 3 Months 1.15128
USD 6 Months 1.42711
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 29-Jun-17 19.02
182d 29-Sep-17 20.06
364d 15-Mar-18 22.55
2y 29-Jun-19 15.79
3y 13-Feb-20 15.89
5y 27-Jan-22 15.59
Indicative Currency Exchange Rates
USDNGN 314.50 315.00
EURUSD 1.0758 1.097
GBPUSD 1.2465 1.2667
USDJPY 110.67 110.70
USDCHF 0.98035 0.9905
GBPEUR 1.1470 1.1674
USDZAR 12.7608 12.9641
JPYNGN 2.7197 2.8203
CHFNGN 310.27 312.46
EURNGN 334.14 335.50