Financial market update

20 June 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria’s inflation rate fell to 12.7% in May, staying above the central bank’s target and adding to expectations interest rates will remain unchanged at a record high. Inflation in Africa’s top oil producer slowed from 12.9% in April, the Abuja-based National Bureau of Statistics said in an e-mailed report on Tuesday. The inflation rate is still lower than the 14.5% peak forecast by the Central Bank of Nigeria for the third quarter, spurred by a jump in gasoline costs in January. The bank forecasts that inflation will ease to below 10 percent, meeting its target, by the end of 2013.

EUROPE: European stocks gained for a third day as Greece moved closer to forming a government and a Spanish debt sale met targets, outweighing a bigger-than-forecast decline in German investor confidence. The Stoxx Europe 600 Index added 1.6% to 248.26 at 4:30 p.m. in London yesterday, the highest since May 11. The benchmark gauge has still dropped 8.9% from its peak on March 16 amid concern that the euro area’s debt crisis has triggered a slowdown in global economic growth.

INDIA: Indian inflation exceeds acceptable levels and restraining it may require sacrificing economic growth, central bank Governor Duvvuri Subbarao said. ‘Headline inflation has come down, core inflation has come down to below 5%, WPI inflation is still above our tolerance level at 7.5%,’ Subbarao said in a speech in Mumbai yesterday, referring to India’s benchmark wholesale-price index. ‘Consumer-price inflation is running above 10%. That is quite disturbing’. The Reserve Bank of India unexpectedly left interest rates unchanged yesterday as price pressures narrow scope to bolster the weakest growth in almost a decade.

Bonds – Some light demand feeding into the markets yesterday on the back of inflation slowing 20bps to 12.70% in May from 12.90% in April. activity is still fairly limited across the curve yields down an average 2bps across the curve.

Bills – Some demand fed into the short end while the medium to long dated maturities were relatively stable ahead of the auction today.

Money Market – OBB and unsecured O/N rates up to 14.50% & 15.50%. Liquidity levels still relatively low.

FX
                            Hi                   Low          Close         Prev.Close
USD/NGN  162.20/30  160.25/35  161.15/25    161.50/60