07 August 2017, Sweetcrude, Lagos — The local and international financial market products and services update
NIGERIA: Largely shunned over the past three years, Nigerian assets are back on foreign investors’ radar thanks to a drop in valuations and improved visibility on exchange rates, data on market transactions suggests. The value of offshore trades more than tripled to $1.59 billion this week from $502 million the previous week, a trader at a market-leading bank said on Friday. Dollars have been in short supply in Nigeria since the price of crude oil, the country’s main source of hard currency, plunged mid-2014, triggering a currency crisis, an exodus of foreign investors and the first recession in a quarter of a century.
But investors imported significant capital again this week to buy Nigerian assets, which have slumped along with the oil price and falls in the value of the naira currency.
FX: Turnover in the window last week was $1.09bn and 84.35% was traded in the range of $/N 360 – 369. In the last two days, we saw the pressure decrease in the market and offers are gradually returning in the range of $/N 366 – 370. Rates should be stable in the window till the maturity of August futures contracts, as major corporates have remitted their dividend payments.
FIXED INCOME: Street reduced risk ahead of the Aug 23 bond auction led by the long end of the bond curve. We expect the same soft tone to start this week as the 16.50% resistance level was broken on the April 2037s. The mixed tone in bills because money market liquidity has reduced significantly (now N76bn long at Friday close) because of decent sales at the OMO auctions. Offshore demand whispered to be influencing the strong local participation at the OMOs. N167.5bn was sold at Friday’s OMO.
U.K: U.K. consumers cut back on spending for a third month in July, putting them in their worst slump in more than four years and dealing another blow to the economy at the start of the quarter.
The 0.8% year-on-year drop in spending was broad-ranging, with clothing, household goods, food and transport among the worst hit, IHS Markit and Visa said in a report published on Monday.
The decline is being driven by a squeeze on pockets as inflation outpaces wage growth, as well as concerns among shoppers about the broader outlook after the economy slowed dramatically in the first half of the year.
CHINA: China’s foreign-exchange reserves posted a sixth straight monthly increase as the Yuan strengthened and economic growth remained robust.
The foreign currency stockpile climbed $23.9 billion to $3.081 trillion in July, the People’s Bank of China said Monday, versus a $3.075 trillion estimate in a Bloomberg survey.
Solid economic data and the presence of curbs on moving money abroad have helped restore confidence in the currency and ease outflow pressure. The foundation for steadier cross-border capital flows has become more solid, the State Administration of Foreign Exchange said last month. A weaker dollar has also lifted the value of assets in yen and euros.
COMMODITIES: Oil traded near $49 a barrel before representatives of OPEC nations meet with their allies to discuss why some of them are falling behind in pledges to reduce production.
Futures fell 0.2% in New York after climbing 1.1% Friday. The two-day meeting in Abu Dhabi starting Monday and co-chaired by Kuwait and Russia will examine why some participants in the deal to collectively reduce global supply aren’t fully implementing their cuts. The number of U.S. drill rigs targeting crude fell by one last week, according to Baker Hughes Inc.
Macro Economic Indicators
Inflation rate (Y-o-Y) for June 2017 16.10%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at August 03, 2017, 30.927
Money Market Highlights
30 Day 18.2022
90 Day 21.5594
180 Day 23.4609
USD 1 Month 1.22889
USD 2 Months 1.25944
USD 3 Months 1.31278
USD 6 Months 1.45167
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 02-Nov-17 18.96
182d 01-Feb-18 19.27
364d 19-Jul-18 22.79
2y 12-Jul-19 17.05
3y 12-Jul-20 16.52
5y 27-Jan-22 16.19
Indicative Currency Exchange Rates
USDNGN 314.50 315.00
EURUSD 1.1697 1.1899
GBPUSD 1.2950 1.3152
USDJPY 110.83 110.86
GBPEUR 1.0960 1.1164
USDZAR 13.3141 13.5177
EURNGN 430.24 431.60
GBPNGN 475.95 477.35