Financial market update

08 June 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: South Africa’s state-owned oil company, PetroSA, is not relenting in its efforts to be part of the companies that buy oil from Nigeria. The efforts become imperative in view of the planned sanction against Iran by United States and allied countries aimed at compelling Iran to drop development of its nuclear power. Iran is a major supplier of oil to South Africa. [Nation]

EUROPE: Spanish Prime Minister Mariano Rajoy said he’s talking to other European leaders about how to shore up the country’s banks as a lawmaker said the industry may need a $126 billion international bailout. European stocks rose today after China cut interest rates and amid speculation that leaders of the 17-member euro region are preparing a rescue operation tailored to Spain, which has been struggling to shore up its banking system.

INDIA: India’s rupee advanced to a two-week high after Prime Minister Manmohan Singh pledged measures to revive economic growth, echoing similar statements from global policy makers. The rupee advanced 0.8 percent to 54.9450 per dollar in Mumbai, according to data compiled by Bloomberg. It earlier touched 54.9325, the strongest level since May 22.

CHINA: China cut borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates, stepping up efforts to combat a deepening slowdown as Europe’s debt crisis threatens global growth. The benchmark one-year lending rate will drop to 6.31% from 6.56% effective yesterday, thje People’s Bank of China said on its website yesterday.

Bonds – Quite a volatile session in the markets on Thursday. With yields rising in the bill market, the bond market is finally reacting. Yesterday saw some upward correction on the five and ten year as the market tries to establish new levels based on the recent upward adjustment in yields.

Bills – In reaction to yields going up at the primary auction on Wednesday matching current secondary market sentiment, bills sold off yesterday across the maturities. The one year surprised at the auction closing up 140bps from the last primary. The maturities on the long end had previously tried to resist the upward adjustment but moved to 90bps today while the short to medium dated maturities also moved up an average 20-25bps

Money Market – OBB and unsecured O/N rates holding at 14.00% & 14.50%. Liquidity levels still relatively low.

FX
Hi              Low           Close        Prev.Close
USD/NGN 162.85/95    161.20/30   162.45/55    162.20/30