Financial market update

08 February 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The CBN governor has disclosed that while the Nigerian economy grew at the rate of seven per cent for the past five years, unemployment has actually doubled at same period. Sanusi also said the current security upheaval and internal insurrection all over the country were as a result of severe poverty and rising unemployment, especially in the north. [Punch]

USA: U.S. stocks rose yesterday, sending the Dow Jones Industrial Average above its highest closing level since May 2008 to 12,874.23, while Treasuries fell and the euro strengthened as Greece’s government made progress on measures to secure international aid.

CHINA: China’s central bank pledged support for first-home buyers as a crackdown on real-estate speculation threatens to trigger a property slump in the world’s second- biggest economy.

INDIA: India’s rupee weakened, reversing previous gains, on speculation importers stepped up purchases of the dollar to take advantage of a more favorable exchange rate. The rupee had advanced earlier as investors boosted holdings of the nation’s stocks to benefit from relatively fast economic expansion.

Bonds – With the announcement of yet another OMO auction yesterday, market sold intraday. The CBN is keen on mopping up any excess liquidity which sometimes translates into high yielding T-bills which is in competition with the short dated bonds and this led to a sell off on the short end.

Bills – Yields went up around 25bp on the back of the announcement of yet another OMO auction. Most of the activity was concentrated on the shorter dated maturities, below 182 days. OMO offering of 261days 257 days on Tuesday, nothing was sold. The regular scheduled T-Bill auction holds tomorrow

Money Market – OBB & unsecured rates have gone up to 14.00% & 15.00% respectively as liquidity levels drop to about N72bio. The CBN took out N95bio on Friday through OMO bills and they offered another N50billion on Tuesday though they sold nothing. It is clear that they will continue to squeeze the liquidity.

FX
                             Hi                    Low                Close            Prev.Close
USD/NGN     161.38/48      159.90/00        160.40/50   160.40/50