09 April 2018, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: The Nigerian National Petroleum Corporation (NNPC) said on Friday it had awarded two of three gas pipeline contracts which in total will be worth more than $2.8 billion. One contract for a roughly 200 km (124.27 miles) stretch of the 614 km Ajaokuta-Kaduna-Kano pipeline and stations was awarded to Oando PLC and OilServe, the state oil company said in a statement. Another stretch of about 200 km was given to a partnership between China Petroleum Pipeline Bureau and Brentex, NNPC said. It did not say how much each individual contract was worth. A third contract will be executed in the coming weeks, NNPC said.
FX: Naira in the I&E last week traded within the $/N 359.87 – 361.00 range with the daily average turnover this week at $341.79m (excluding Friday’s figures), 12% higher than the previous week. FX liquidity remains decent in the range of $/N 359.50 – 360.50. Results of the last FX retail intervention held two weeks ago was released late on Friday. We did note from the retail result that the lowest winning rate ($/NGN 326.00) has been scaled up to $/NGN 330.00.
Nifex closed the week at a fresh low, narrowing the premium between the two main windows to a record low of N23.13. More information on CBN wholesale auction revealed that range of bids last week were between $/N 336.50 – 339.00
FIXED INCOME: In early trading on Friday, bill market was cautious with the street on the lookout for the OMO auction. Eventually, the auction was not announced and buying resumed.
The focus from clients and market, in general, shifted to the new OMO bill (6 Dec 18) which is currently the highest yielding.
Offers were lifted at 13.85%-14.00% discount (N187.5bn traded on Friday) vs. yesterday’s 14.30% print.
With FX refunds coming in early this week, the money market is expected to remain very liquid keeping bill market well bid till any OMO announcement. The bond market was mostly quiet on Friday.
U.K: The Bank of England may have a quiet dissenter among its ranks when it comes to the need for higher interest rates this year.
In speeches, interviews and Parliament testimony, eight of the nine Monetary Policy Committee members, including Governor Mark Carney, have backed the view that tightening is warranted — and at a faster pace than previously thought. But Deputy Governor Jon Cunliffe has been noticeably quiet, raising questions about the views of one the MPC’s most dovish members.
E.U: Investors are losing faith in the strength of the euro-area economy after a string of numbers that fell short of expectations.
A monthly report from research group Sentix said their view of the economy has turned negative for the first time since July 2016. It said the downward dynamic was “even more pronounced” for Germany, where separate data on Monday showed a sharp drop in exports in February.
COMMODITIES: Oil’s decline slowed after prices fell to an almost three-week low as investors continued to evaluate the potential impact of an escalating trade conflict between the U.S. and China.
Futures in New York traded below $63 a barrel after dropping 4.4% last week. While U.S. President Donald Trump predicted the Asian nation will be first to buckle as the world’s two largest economies teeter on the brink of a trade war, a speech by China’s Xi Jinping at a conference on Tuesday may shed some light on his plans. Meanwhile, money managers slashed bets on rising West Texas Intermediate crude by the most since August, while short-selling surged.
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 April 04, 2018, 46.554
Money Market Highlights
30 Day 14.6362
90 Day 15.2840
180 Day 17.0643
USD 1 Month 1.89713
USD 2 Months 2.02225
USD 3 Months 2.33746
USD 6 Months 2.45380
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 12-Jul-18 13.97
182d 04-Oct-18 14.46
364d 14-Mar-19 15.08
2y 13-Feb-20 13.40
3y 15-Jul-21 13.73
5y 27-Jan-22 13.50
Indicative Currency Exchange Rates
USDNGN (I&E) 359.00 360.50
EURUSD 1.2134 1.2375
GBPUSD 1.3907 1.4193
USDJPY 107.05 107.50
GBPEUR 1.1345 1.1584
USDZAR 11.9810 12.2500
EURNGN 440.49 441.86
GBPNGN 504.50 505.90