03 April 2018, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: Nigeria’s foreign exchange reserves stood at $46.2 billion as of March 28, up 8.8% from a month earlier, central bank data showed on Saturday. Successful debt sales, including a Eurobond offering last month, have helped the government accrue billions of dollars in foreign reserves, although they remain far from the peak of $64 billion in August 2008. The government raised $2.5 billion in Eurobonds in February and expects more to follow. Nigeria’s foreign exchange buffer has climbed 53% since March 2017 when it stood at $30.30 billion.
FX: As expected, retail FX auction happened on Thursday due to the Easter holiday on Friday. Eligible transactions at the retail auction remain targeted to Raw material and machineries, Agriculture, Airlines and Petroleum products. Year-to-date, average amount sold at each retail auction is circa $318m. The market pattern at the I & E Market still ranging $/NGN 358.00-361.00
FIXED INCOME: CBN’s decision not to mop up excess liquidity on Thursday could have been influenced by the timing of the FX retail auction. With no OMO auction, the tone in bills was firm and remained centered around the Nov bills (currently the highest yielding).
We do expect the OMOs today with money market estimated to belong circa N200bn. Also, there will be a bill auction on Wednesday; N9.5bn of 91day, N47.6bn of 182day and N38.08bn of 364day bills to be offered.
E.U: Euro-area manufacturing expanded at the weakest pace in eight months in March as factories delayed production due to increasing capacity constraints.
A Purchasing Managers’ Index dropped to 56.6 from 58.6 — in line with a previous flash estimate — IHS Markit said on Tuesday. Activity slowed across countries and industries in the region but remained indicative of solid growth nonetheless, it said.
IHS Markit said that while supply-chain bottlenecks and bad weather were stymieing production, in some cases demand is being capped by higher prices and the euro’s appreciation.
CHINA: China will respond to any tariffs imposed by the U.S. against alleged violations of intellectual property rights with the same proportion, scale and intensity, said its U.S. ambassador Cui Tiankai.
Cui’s comments, in an interview with state-run CGTN English news channel Tuesday, are the first to indicate that China will retaliate on a scale that matches U.S. plans for additional duties on Chinese imports. The U.S. is readying duties on $50 billion of Chinese products as punishment for what Washington sees as widespread violations of intellectual property rights. U.S. Trade Representative Robert Lighthizer has until Friday to propose a list of Chinese products to be targeted to compensate for what he said was harm caused to the U.S. economy by China’s policies.
COMMODITIES: Oil held losses below $64 a barrel as the risk of a trade war between China and the U.S. rattles a market that’s already grappling with swelling inventories.
Futures were little changed in New York after losing 3% on Monday. China imposed retaliatory tariffs on U.S. goods valued at about $3 billion, the latest move in an escalating trade dispute between the world’s largest economies that are spurring investors to shy away from risk assets. Meanwhile, American crude stockpiles are forecast to have risen for the fifth time in six weeks.
Macro Economic Indicators
Inflation rate (Y-o-Y) for February 2017 14.33%
Monetary Policy Rate current 14.00%
FX Reserves (Moving Avg Bn $) as at March 28, 2018, 46.208
Money Market Highlights
30 Day 14.8549
90 Day 16.0101
180 Day 17.7990
USD 1 Month 1.88313
USD 2 Months 1.99944
USD 3 Months 2.31175
USD 6 Months 2.45380
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 14-Jun-18 14.64
182d 27-Sep-18 14.83
364d 14-Mar-19 15.13
2y 13-Feb-20 13.68
3y 15-Jul-21 13.89
5y 27-Jan-22 13.6
Indicative Currency Exchange Rates
USDNGN (I&E) 359.00 360.50
EURUSD 1.2222 1.2491
GBPUSD 1.4055 1.4257
USDJPY 105.84 106.18
GBPEUR 1.1324 1.1528
USDZAR 11.6213 11.9126
EURNGN 445.03 444.91
GBPNGN 506.86 508.25