04 July 2018, Sweetcrude, Lagos — The local and international financial market, products and services update.
NIGERIA: French President Emmanuel Macron discussed ways to intensify the battle against Islamist militants in West Africa during talks with Nigerian leader Muhammadu Buhari.
Nigeria’s fight against the nine-year-old Boko Haram insurgency in the far northeast has left more than 20,000 people dead and forced millions to flee their homes. In the semi-arid Sahel region south of the Sahara desert, France has deployed 4,000 troops in its Barkhane mission that’s hunting down Islamist militants in Mali, Burkina Faso, Chad, and Niger.
FX: A bit of reprieve in terms of liquidity in the interbank market yesterday. Market levels have however inched up to the $/NGN 361/363, with corporates willing to deal at the mid. Yesterday’s turnover stood at $160.15, almost 2 times up compared to the previous session. The CBN just released results of the wholesale auction and maintains its directive to banks to allocate at least 45% to targeted sector/category.
FIXED INCOME: It was a very active trading session in the fixed income space, streets got some groove on bonds and there were some RHS trades.
This is slightly different last week’s tone and average yield dropped by 20bps.
T-bills were well bid too across the curve, ahead of today’s PMA. We think the PMA outcome will remain unchanged from the previous auction.
Money market liquidity was decent and FAAC inflow is still been expected.
U.K: The pound edged up on Wednesday ahead of a survey on Britain’s dominant services sector which traders said could lift the beleaguered currency after decent numbers from the manufacturing and construction sectors earlier this week.
Sterling rose 0.1% versus the dollar to a five-day high of $1.3227 GBP=D3, away from 2018 lows hit last week of $1.3050. Versus the euro the pound was up 0.1% at 88.34 pence EURGBP
The Services Purchasing Managers’ Index is forecast to come in at 54 for June, in line with the previous month.
CHINA: China’s central bank is caught in a bind, as it seeks to tighten monetary policy for some parts of the economy while loosening it for others.
Already engaged in the mammoth task of wringing bad debts out of China’s $40 trillion-plus financial system, the People’s Bank of China is now attempting to achieve that while simultaneously being asked to bolster flagging growth and rescue falling stock markets.
That would be a tough enough feat for any central banker, but the outlook for PBOC Governor Yi Gang just a few months into his new job is even more complicated: A growing trade war with the Trump administration coupled with rising borrowing costs in the U.S. has prompted investors to sell the Yuan heavily, raising the prospect of the central bank having to defend it.
COMMODITIES: Oil extended gains to near $75 a barrel after an industry report showed U.S. inventories shrunk as global output disruptions continued to stoke concerns over supply shortfalls.
Crude in New York increased as much as 1% as the premium on front-month futures surged even higher against later contracts. The American Petroleum Institute was said to report nationwide stockpiles dropped 4.51 million barrels last week. While the Saudi Cabinet affirmed the kingdom is ready to use its spare capacity as needed, the Middle Eastern nation also reiterated with Russia that OPEC’s agreement with allies is to boost output by 1 million barrels a day.
Macro Economic Indicators
Inflation rate (Y-o-Y) for May 2018 11.61%
Monetary Policy Rate current 14.00%
FX Reserves (Moving Avg Bn $) as at June 13, 2018, 47,627
Money Market Highlights
30 Day 13.4749
90 Day 14.0931
180 Day 15.1206
USD 1 Month 2.09994
USD 2 Months 2.17319
USD 3 Months 2.34250
USD 6 Months 2.50969
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 04-Oct-18 11.92
182d 03-Jan-18 12.78
364d 04-Apr-19 13.36
2y 13-Feb-20 13.35
3y 15-Jul-21 13.49
5y 27-Jan-22 13.65
Indicative Currency Exchange Rates
USDNGN (I&E) 360.00 362.00
EURUSD 1.1543 1.1746
GBPUSD 1.3105 1.3307
USDJPY 110.50 110.60
GBPEUR 1.1239 1.1442
USDZAR 13.6014 13.8047
EURNGN 420.32 421.66
GBPNGN 476.73 478.12