24 July 2017, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said the high inflation rate and rising operating costs in the banking sector are some of the major reasons for the high-interest rate in the country. He said this in a lecture titled: ‘The dilemma of monetary policy and exchange rate management in a recession: Potential options for Nigeria’ at the second homecoming series of the Economics Department of the University of Nigeria, Nsukka. Emefiele, according to a statement, said with inflation rate still hovering above 16%, the apex bank would be failing in one of its key mandates if it reduced interest rates at this time. Senate President, Bukola Saraki, had asked the apex bank to reduce the interest rate as it was affecting the growth and survival of businesses.
FX: The CBN finally announced the much-awaited FX retail auction on Friday with results expected this week. It also sold $195m through the wholesale intervention and allocation to banks for invisible transactions last week. The amount of the CBN daily intervention into the market was unchanged last week at $0.5mio; range $/N 305.30 – 305.40.
FIXED INCOME: Bill market was well bid for most of Friday. The retail auction was finally announced on Friday and we should see a slowdown in the buying to start this week. Bond market continued its unimpressive run. The average yield on bills now 19.51% and bonds 16.27% yield. O/N closed at 16%.
U.K: The International Monetary Fund revised down its 2017 growth forecast for the U.K., citing slower-than-expected expansion at the start of the year.
The pace will slow to 1.7% from 1.8% in 2016, the IMF said in an update of its World Economic Outlook, after predicting a pickup to 2% in April. The cut comes after growth in the first three months of the year dipped to 0.2%, and data this week are likely to show barely any recovery in the second quarter.
While the U.K. initially performed better than many expected after the Brexit vote in June 2016, accelerating inflation is starting to crimp consumer spending, the biggest driver of the economy. The pound’s decline since the referendum has pushed inflation to 2.6%, above the pace of average wage growth.
U.S: The U.S. Federal Reserve will unveil the timing of its balance sheet unwind in September and wait until December to raise interest rates again, according to a Bloomberg survey of 41 economists.
Results of the survey, conducted July 18-20, showed economists are growing increasingly concerned over the recent slowing of inflation, compared with a similar questionnaire in June. Nonetheless, two-thirds of respondents said Fed officials wouldn’t change the language of their next policy statement to highlight their growing worries. The Federal Open Market Committee meets July 25-26 in Washington.
COMMODITIES: OPEC and its allies indicated they weren’t planning any big changes to their supply deal, even as oil prices remain below $50 a barrel amid growing scepticism that their output cuts are working.
Capping rising oil production from Nigeria and Libya — both exempt from the current agreement — won’t be on the agenda at the meeting on Monday in St. Petersburg, Russia, said two people familiar with the planned talks. There’ll be no discussion of deeper cuts, Saudi Minister of Energy and Industry Khalid Al-Falih told reporters before the gathering.
Macro Economic Indicators
Inflation rate (Y-o-Y) for June 2017 16.10%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at July 19, 2017, 30.511
Money Market Highlights
30 Day 18.2160
90 Day 19.8502
180 Day 23.0566
USD 1 Month 1.23222
USD 2 Months 1.26056
USD 3 Months 1.31444
USD 6 Months 1.45306
USD 12 Months 1.72400
Indicative Currency Exchange Rates
USDNGN 314.50 315.00
EURUSD 1.1546 1.1749
GBPUSD 1.2939 1.3141
USDJPY 110.70 110.73
GBPEUR 1.1092 1.1296
USDZAR 12.8683 13.0717
EURNGN 366.82 367.90
GBPNGN 410.39 411.79