18 July 2018, Sweetcrude, Lagos — The local and international financial markets, products, and services update. NIGERIA: Nigerian President Muhammadu Buhari submitted a 228.9 billion naira ($750 million) supplementary budget for 2018 to parliament on Tuesday after a six-month delay in getting the main budget approved.
In a letter accompanying the draft supplementary budget, Buhari said implementing the main 9.12 trillion Naira ($29.92 billion) budget for the year “will be extremely challenging,” without elaborating.
Buhari’s administration has struggled to pass its annual budgets, some delayed by as much as half a year, as lawmakers and the presidency have waged politically charged battles over items like infrastructure projects.
FX: The liquidity in the I&E window was decent yesterday and levels were seen between $/N 361.25 – 362.30. Yesterday’s turnover figures printed at $70.77m, almost double the previous session. FMDQ data shows that 99.98% of the trades were done between $/N 360.00 – 363.00. This is consistent with what we witnessed at the same time last week.
FIXED INCOME: Quiet session on Friday to end the bond market last week with the few inquiries seen still from locals. With cN300b still left in the money market, bill market ended the week on a bullish note as no major naira outflows seen.
Bill yields contracted by (-22) bps on average across the curve led by the short dates (July and August bills).
We expect more of the same this week in both bills and bonds.
T-Bill auction on Wednesday with N178.4bn on offer across the three tenors (91, 182 and 364day)
E.U: Unprecedented stimulus by the European Central Bank helped ease income inequality in the euro zone, with poorer households benefiting most, according to a study.
A paper published Wednesday shows that negative interest rates and large-scale bond purchases have made a significant contribution to reducing unemployment, especially at the lower end of the pay scale. With their findings, the economists — working at the ECB and Princeton University — are refuting criticism that unconventional policy has mainly supported the rich by boosting prices for real estate or stocks.
U.K: An anticipated pickup in U.K. inflation failed to materialize last month, a development that sent the pound lower as investors pared bets for a Bank of England interest-rate increase next month.
Summer sales meant clothes prices dropped sharply in June, and there was also drag from computer games. Annual inflation stayed at 2.4%, surprising economists who had expected the rate to accelerate to 2.6%. Core inflation also surprised to the downside, slowing to a 15-month low of 1.9%.
COMMODITIES: Oil slipped in New York, approaching its lowest level in almost a month, after a surprise increase in U.S. crude inventories further allayed concerns of a looming supply crunch.
Futures in New York dropped as much as 1%. The American Petroleum Institute was said to report stockpiles rose 629,000 barrels last week, whereas government data due later Wednesday is forecast to show a drop of 4.1 million barrels. Increased output from Saudi Arabia, Iraq and Russia has also given the market relief from fears of losses in Venezuela, Iran and elsewhere.
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 July 16, 2018, 47,514
Money Market Highlights
30 Day 12.5226
90 Day 12.7044
180 Day 14.2287
USD 1 Month 2.07850
USD 2 Months 2.17350
USD 3 Months 2.33263
USD 6 Months 2.51850
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 18-Oct-18 10.14
182d 10-Jan-18 12.50
364d 04-Apr-19 13.17
2y 13-Feb-20 13.38
3y 15-Jul-21 13.40
Indicative Currency Exchange Rates
USDNGN (I&E) 360.00 362.00
EURUSD 1.1602 1.1804
GBPUSD 1.3164 1.3350
USDJPY 112.42 112.79
GBPEUR 1.1211 1.1437
USDZAR 13.0960 13.4000
EURNGN 420.55 426.30
GBPNGN 473.98 487.50