Financial market update

27 April 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The naira retreated against the dollar on Thursday after Central Bank of Nigeria Governor Lamido Sanusi said an increase in March inflation was within estimates, adding to speculation that rates will be kept on hold. Inflation accelerated to 12.1% in March as food prices increased, the National Bureau of Statistics said on Wednesday. Sanusi said the March inflation data were in line with the bank’s estimate, with the bank still expecting a peak of 14.5% in the third quarter and a gradual slowdown to below 10% by the end of 2013.

EUROPE: Economic confidence in the euro region declined more than economists had forecast in April, as the region’s slump showed signs of deepening. An index of executive and consumer sentiment in the 17- nation euro area fell to 92.8 from a revised 94.5 in March, the European Commission in Brussels said yesterday. Economists had forecast a drop to 94.2 from a previously reported 94.4, the median of 29 estimates in a Bloomberg News survey showed. Europe’s economy is faltering as spending cuts across the region undermine hiring and consumer confidence.

INDIA: Indian stocks fell for the second day as concerns agencies will cut the nation’s sovereign credit rating outweighed optimism on the U.S. economy. The BSE India Sensitive Index, fell 0.1 percent to 17,130.67 at close yesterday. Standard & Poor’s cut India’s credit outlook to negative from stable on Wednesday, citing slowing economic growth and a widening current-account deficit.

CHINA: China’s economy expanded at the slowest pace in almost three years last quarter, increasing pressure on Premier Wen Jiabao to ease monetary policy. The central bank in February reduced lenders’ reserve requirements for the second time in three months to spur credit expansion and bolster economic growth without triggering gains in consumer and property prices.

Bonds – Stable session in the bond market on Thursday, the yield curve traded relatively flat as no buying interest was seen in the market. Traders remain cautious reacting to inflation news and increasing uncertainty on the pricing of the source bonds required for the destination bonds in the bond switching exercise in the coming weeks.

Bills – A massive rally recorded in the bills market yesterday, yields dipped 50 – 70bps across all tradable maturities defying all caution expected from higher YOY inflation rate released on Wednesday. Excess demand at Wednesday’s auction filtered into the secondary market on Thursday marked by an all-bullish session.

Money Market – OBB and O/N off 50bps 13.50% and 14.00% respectively, this is due to excess net inflow of ngn40 bio from a maturing t-bill yesterday after funding for Wednesday’s auction.

FX
                           Hi             Low         Close       Prev.Close
USD/NGN  157.45/55   157.15/25  157.37/47   157.15/25