08 January 2018, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: Renaissance Capital (RenCap) has expressed excitement over the stability of the naira. The research and investment firm stated this in a report titled: “Weaker dollar improves emerging markets (EM)/Frontier FX fair values,” which assessed the currencies of some emerging and frontier markets that was obtained yesterday. It, however, argued that the fair value of the naira has dropped from about N360 to a dollar as of the second quarter of 2017, to N385 to a dollar presently.
FX: Liquidity in the windFridayent on the Friday, with trades seen in the range of $/N 359 – 362. So far last week, turnover is $499.48m. The CBN also announced its first retail auction for year dedicated to the payment for Raw materials and machineries; Agriculture; Airlines and Petroleum products.
FIXED INCOME: The rally continued in bonds on Friday, bond offers are now below mid 13% levels across the curve. Both offshore and local accounts are still putting on NGN risk. T-bill market was a bit mixed on Friday as well, there was demand for long dated bills while short dated bills sold off because of the CBN auctions. CB sold a total of N260bn 26apr18 and 13sep18 bills and also announced a retail FX auction, both actions took out excess money market liquidity that led to sell off on the short end of the curve.
E.U: Confidence in the euro area continued its advance at the end of 2017, capping what was probably the strongest year for the economy in a decade.
The European Commission’s measure of sentiment touched its highest since late 2000 in December. The reading of 116 was above the median forecast of 114.8 in a Bloomberg survey and was based on an improvement in the outlook for industry and services.
After slowly emerging from the bank failures, record joblessness and sovereign debt crisis that marred its last decade, the 19-nation economy has found its feet. Growth in 2017 was probably the fastest since before the financial crisis and momentum this year is forecast to be almost as impressive.
U.S: The last time Goldman Sachs Group Inc.’s financial conditions index was pointing to a market environment this good, its then-chief economist was using the gauge to analyze the effects of Federal Reserve decisions that he now helps make.
New York Fed President William Dudley developed the index in the 1990s while at Goldman to create an alternative way to measure the impact of monetary policy on the economy. Now, with the index signaling the easiest conditions since 2000 after a big run-up in U.S. stocks, Fed officials are starting to wonder if they will need to address inflated asset prices in order to avoid over-inflated consumer prices.
COMMODITIES: Oil investors are taking a little step back from the most upbeat start of the year in recent memory.
While bets on rising prices for Brent crude remained at record levels, with the global benchmark on a tear, hedge funds retreated from the most bullish stance on West Texas Intermediate oil in 10 months.
The tempered enthusiasm for American oil reflects concerns that a steady increase in production from shale gushers could eventually undermine OPEC’s resolve to rebalance the market — especially with prices at a level considered by many as a trigger for new investment.
Macro Economic Indicators
Inflation rate (Y-o-Y) for November 2017 15.91%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at January 04, 2018, 39,074
Money Market Highlights
30 Day 16.1537
90 Day 17.2578
180 Day 18.5087
USD 1 Month 1.55688
USD 2 Months 1.61674
USD 3 Months 1.68577
USD 6 Months 1.83363
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 12-Apr-18 13.75
182d 05-Jul-18 15.14
364d 29-Nov-18 15.54
2y 13-Dec-19 14.06
3y 13-Dec-20 13.81
5y 27-Jan-22 13.43
Indicative Currency Exchange Rates
USDNGN (I&E) 359.00 360.00
EURUSD 1.1887 1.2089
GBPUSD 1.3439 1.3641
USDJPY 113.09 113.12
GBPEUR 1.1193 1.1396
USDZAR 12.3550 12.5610
EURNGN 431.49 432.85
GBPNGN 487.40 488.79