Financial market update

21 February 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria consumer inflation rises to 12.60% in January from 10.30% in December. The jump is due to the removal of the fuel subsidy on the 1st of January 2012. While we might likely continue to see the inflation rate increase, the size of the increase will likely not be as large as this. The recent appreciation in the naira should offset price rises and as long as government spending can be kept under control we might not see any further tightening just yet.

EUROPE: European governments moved toward a second rescue of Greece, calculating that the 130 billion-euro ($172 billion) cost of a fresh bailout is a price worth paying to prevent a default that could shatter the euro area. The 17-nation euro gained as much as 1 percent to $1.3277 yesterday, bringing its climb against the dollar this year to more than 2 percent.

CHINA: The Chinese central bank bought more foreign exchange than it sold for the first time in four months in January, spurring speculation capital flowed back to Asia’s largest economy.

Bonds – With the sell off on Friday the market was relatively quiet on Monday. Some light demand fed in across the curve yesterday with yields dipping in some areas.

Bills – Very volatile intraday as the market opened yesterday buying across the maturities. With the inflation figure coming out we saw a reversal and sell off to close the day as the closing rates failed to tell the story. The auction on Wednesday should see significant interest from offshore especially on the 364day bill.

Money Market – OBB & unsecured rates stable yesterday at 14.00% & 15.50% respectively as liquidity continues to remains thin.

WDAS CBN Auction 13

Amount offered: 250m Amount sold: 145,274,251.93
Marginal: 156.10
Weighted average: 156.14
Highest rate:156.20
Lowest rate: 154.90
Banks: 13

FX
                            Hi                Low              Close           Prev.Close
USD/NGN      157.95/05    157.00/10      157.50/60     158.30/40