25 July 2017, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: A weak naira and stubborn inflation may prevent Nigeria’s central bank from following South Africa and Ghana in cutting interest rates. Only two of 19 economists in a Bloomberg survey predicted the Monetary Policy Committee will cut borrowing costs on Tuesday. The rest said the key rate will stay at 14%, where it’s been for a year. Governor Godwin Emefiele, who is scheduled to announce the MPC’s decision in the capital, Abuja, said last month that tight monetary policy will continue. The central banks of South Africa and Ghana cut their key rates in the last week as the inflation outlook in the two economies improved. While price growth in Nigeria, Africa’s most-populous nation, slowed for a fifth consecutive month to 16.1% in June, it remains well above the government’s 6% to 9% target range. “Inflation still remains very high,” Razia Khan, head of Africa macro research at Standard Chartered Bank Plc, said in an emailed response to questions. “It would be wrong to demonstrate too much complacency.”
FX: Market kicked off the week in the same monotone as last week, which was well bid. The range seen yesterday in the I&E window was between $/N 366 – 380.00 and the turnover report to be released later on the day should give more insight on levels traded.
FIXED INCOME: Largely an uneventful start to the week yesterday. Bonds remain tilted to a bearish bias while bill market was only active for half of the day. No OMO auction Yesterday – possibly because of another CBN system downtime. Hold decision expected at today’s MPC outcome.
U.S: Frustration is mounting among leading foreign policy officials in President Donald Trump’s administration as they chafe at some policy and bureaucratic defeats and complain they lack independence to do their jobs, officials say.
The clash between internationalists urging the traditional U.S. leadership role in the world and advocates of an “America First” approach has worn down foreign policy and intelligence professionals inside the government, according to the officials.
Secretary of State Rex Tillerson has told friends he will be lucky to last a year in his job, according to a friend, while two officials said national security adviser H.R. McMaster was frustrated by what he sees as disorganization and indiscipline on key policy issues inside the White House.
E.U: The European Central Bank can be more “assured” about meeting its inflation goal, but it’s still too soon to call its mission accomplished, according to Executive Board member Yves Mersch.
“A very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation,” Mersch said at an event in Singapore on Tuesday. “Reflationary forces are at play. Price pressures in the early stages of the pricing chain remain strong but have still not transmitted to the later stages.”
COMMODITIES: Oil extended gains toward $47 a barrel as Saudi Arabia promised deep cuts to crude exports next month to help ease a global glut.
Futures in New York added as much as 0.8% after rising 1.3% Monday. Saudi Arabia will cap shipments at 6.6 million barrels a day on August, 1 million lower than a year earlier, Energy and Industry Minister Khalid Al-Falihsaid in St. Petersburg, Russia. U.S. crude stockpiles probably fell for a fourth week through July 21, according to a Bloomberg survey before government data Wednesday.
Oil remains in a bear market amid concern rising global output will offset curbs by members of the Organization of Petroleum Exporting Countries and its allies.
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 18.5087
90 Day 19.9890
180 Day 22.9405
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
Tenor Maturity Yield (%)
91d 26-Oct-17 19.55
182d 18-Jan-18 20.13
364d 05-Jul-18 22.26
2y 12-Jul-19 16.80
3y 14-Jun-20 16.46
5y 27-Jan-22 16.14
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