Financial market update

22 May 2012, Sweetcrude, Lagos - Local and international financial market update.
NIGERIA: The CBN at the weekend said funds for the repayment of foreign loans can be funded from both the Wholesale Dutch Auction (WDAS) and the interbank market. Specifically, the apex bank explained that while repayment of principal and interest payment on loans contracted for the purpose of raw materials, plant and machinery purchases could be funded from the WDAS, funds for repayment and interest payment for foreign loans acquired for others purposes could be sourced from the interbank market.

EUROPE: European stocks climbed, rebounding from last week’s biggest selloff since September, as China’s pledge to boost growth outweighed concern that Greece may be forced to leave the euro area. The Stoxx Europe 600 Index gained 0.5 percent to 240.17 at the close in London yesterday, recouping some of last week’s 5.2 percent drop.

INDIA: Subir Gokarn, a deputy governor at the Reserve Bank of India, commented on the depreciation of the rupee in Mumbai yesterday. “It has been touching lows quite regularly. There is clearly a strong pressure on the rupee to depreciate. This is coming from a number of factors. One is clearly the current account deficit, demand from oil has been strong and the capital flows are not matching that. ‘‘We have done a number of things and will continue to do things that we think will have the impact of stabilizing the currency. But ultimately capital flows are going to be the main determinant of how the currency behaves.’’

Bonds – Some light demand feeding into the market on Monday, yields came off across the curve up to 10bps on the long end. Volumes are still light with trading largely cautious.

Bills - Very bearish markets to open the week, rates up an average 50bps on the long dated bills. Some offshore selling fuelling the rise in rates which got kicked off by upward trending inflation. Auction comes up Wednesday, the results of which would go a long way in determining rate direction.

Money Market - With liquidity levels thin, OBB and unsecured O/N rates are averaging 14.25% & 15.00% respectively. MPC met yesterday [21st May] and today [22nd May], the benchmark rate is expected to be held flat at 12.00%

CBN WDAS AUCTION

Offered: 150mio Sold: 150mio
Marginal rate: 155.70
Weighted average: 155.78
No. of Banks: 21

FX
                           Hi             Low          Close        Prev.Close
USD/NGN   159.22/32  158.60/70  158.80/90  158.50/60

NIBOR (%) LIBOR (%)

O/N

15.0000

USD 1 month

0.2398

7 Day

15.2917

USD 2 month

0.3458

30 Day

15.6750

USD 3 month

0.4669

60 Day

15.9167

USD 6 month

0.5671

90 Day

16.2917

USD 12 month

1.0692

Y/Y Consumer Inflation April 2012 :

12.9%

FX Reserves: 18 May 2012 (USD bn)

37.285

MPR

12.00%

Source: FMD and CBN

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