For the first time since April 2017, Naira Settled FX currency futures open interest surpassed the 4,000 contracts mark on May 28th, 2018, after a substantial volume of transactions took place on that date in anticipation of the usual price changes that accompany expiration. The latest futures to expire was NGUS MAY 30, 2018 which matured on May 30th.
Until recently, trading volume had reduced drastically in the FX futures market between April and October 2017, only to pick up slowly thereafter. However, since April 25th, 2018, the market has been witnessing increased activity and momentum which hit its peak on May 28th.
It will be recalled that the market hit its highest open interest ever on April 18th, 2017 with 4,187 contracts, since then, open interest has been hovering between 3,200 and 3,500 contracts. But on May 28th, currency futures open interest spiked to 4,169 contracts of one million dollars each, the third highest ever.
Understanding Open Interest
Open Interest is a measure of the total number of contracts that are still outstanding or in the hands of market participants at the end of each day. In most cases, open interest is used with reference to options futures or commodity trades. Open interest is not the same as volume.
Volume is a measure of the number of transactions that take place in a market on a particular day, but open interest measures the flow of money into the futures market. Open interest could act as a pointer or signal to where the futures market is headed.
Increase in open interest, often, points to a bull market especially if accompanied by substantial trading volume while a falling open interest is usually taken to indicate a bear market.
The Nigerian Currency Futures, a non-deliverable instrument, was introduced by the Central Bank of Nigeria in June 2016 as one of the policy instruments to stabilize the Naira. To a large extent, there is an agreement among experts that it has done just that.
The Naira has been relatively stable for some months now, thanks to various CBN interventions and the Naira settled currency futures market. The increase in open interest as noted in this article is an indication that the currency futures market is alive and well.
Currency Futures and Price Discovery
One of the functions of the futures market, everywhere, is that they help in price discovery. Price discovery is the process of establishing the value of an asset (in this case, the Naira/Dollar Exchange Rate) based on interactions between buyers and sellers.
It is not very clear if the currency futures market in Nigeria plays that role as the prices are determined by the CBN or FMDQ OTC Securities Exchange, but it is expected that the pricing decisions by the CBN or FMDQ are based on available information.
It has been the custom of the CBN/FMDQ to revise the prices of outstanding currency futures at each expiration or maturity date. And they do it very religiously and predictably. As expected, that was done on May 30, 2018th when NGUS MAY 30, 2018 matured/expired by increasing the prices of all the currency futures by N1.03 or 0.3%.
For example, the NGUS JUN 27 2018 that traded at N360.79/$ before May 30th, now trades at N361.82/$ while the NGUS APR 24 2019 which was trading at N362.29/$ is now worth N363.32/$. The implication of the upward revaluation of the futures prices is that the Naira is expected to weaken against the Dollar by about 0.3% over the next month.
FG hands over National Theatre to CBN, Bankers Committee, to create 1 million jobs
The Federal Government has announced the official hand over of the National Arts Theatre Complex at Iganmu Lagos, to the Central Bank of Nigeria (CBN) and the Banks under the aegis of the Bankers’ Committee, in order to commence the renovation of the facility.
This was contained in a tweet post by the Presidential Aide to President Muhammadu Buhari on New Media, Tolu Ogunlesi, on his official Twitter handle on Sunday, July 12, 2020.
UPDATE: The event has taken place.
“@NigeriaGov on Sunday officially handed over the National Theatre complex in Lagos to @cenbank and Banks under the aegis of the Bankers’ Committee, to commence the RENOVATION of the facility.” https://t.co/h2aWfuHyF8
— tolu ogunlesi (@toluogunlesi) July 12, 2020
During the event which was attended by the Minister for Information and Culture, Lai Mohammed and the Lagos State Governor, Babajide Sanwo-Olu, the CBN Governor, Godwin Emefiele, said the bankers were targeting 1 million jobs from this project in the next 5 years.
In the tweet post, Tolu Ogunlesi said, ‘’The Nigerian Government on Sunday officially handed over the National Theatre complex in Lagos to Central Bank of Nigeria and Banks under the aegis of the Bankers’ Committee, to commence the renovation of the facility.’’
Emefiele said the handover of the facility to the committee was timely, considering the external headwinds facing the country’s economy at the moment. He said that the renovation of the facility which would be completed in 18 months, would have transformed the facility into Nigeria’s Creative Industrial Centre.
According to the CBN boss, the National Arts Centre will be comparable to other world-class entertainment and convention centres in any part of the world. He said the activities in the centre which would include music, movies, fashion and ICT, could be a very important source of growth and reduce the dependence on revenues from crude oil.
He pointed out the creative industry has the potential to generate over $20 billion annually for Nigeria with its human capital resources and an enabling environment that would harness the creative talents of her youths.
Emefiele said: “We must do more to encourage the innovative works of these young talented Nigerians as they can make significant contributions to the growth and development of our country.’’
“Secondly, given our growing population of close to 200m people, out of which 60 per cent are under the age of 35, it is imperative that we strive to create opportunities that will keep our youths engaged, as it would portend great dangers for the progress of our nation if we allow these talents go to waste”
Emefiele said that the Creative Industries Financing Initiative which was set up in December 2018 was to support startups and existing businesses as well as foster development of Nigeria Creative Industries Centre in 4 major cities in Nigeria. He said the bankers’ committee would support the creative industry with about N25 billion of initial funding.
He said upon the completion of the renovation works at the theatre with the supporting facilities, the committee intends to set up similar creative industries centres in Kano, Port-Harcourt or Enugu.
He also said that the theatre would support skills acquisition and job creation for over 1 million Nigerians. These Nigerians will be empowered with funds at a single digit interest rate, high-level training using state of the art tools and networks that will enable them to turn their ideas into a reality.
He revealed that the supporting facilities like retail outlets, hotels, entertainment centres and an international conference centre would also help to reposition the centre as a viable location for high-level international meetings and conventions.
FG disburses N349.5m in Conditional Cash transfer to poor households in Kaduna
The disbursement was done under the federal government’s Conditional Cash Transfer.
The Federal Government has successfully disbursed a total of N349.5 million to 34,946 poor and vulnerable households in Kaduna State, under the conditional cash transfer programme.
According to the Head of Cash Transfer Unit in the State, Hajiya Hauwa Abdulrazaq, the disbursement lasted a period of 10 days, from July 1 to July 10.
Speaking in an interview with the News Agency of Nigeria (NAN) on Sunday, Abdulrazaq explained that the benefiting households were drawn from 9 local government areas in the state – 4,470 from Kajuru; 8,032 in Birnin Gwari; 1,963 in Kauru; 1,406 in Sanga, 4,380 in Lere, 2,021 in Kachia; 5,478 in Ikara; 2,784 in Chikun, and 4,412 in Kubau LGAs.
She noted that the disbursement was done under the federal government’s Conditional Cash Transfer, a Households Uplifting Programme targeting poorest of the poor households in the country, and that each of the households received N10,000 each, being payment for the months of May and June at N5,000 per month.
“The households uplifting programme is one of the national social investment programmes which implementation began in September 2016,” she said.
NAN reports that the programme began in 2017 in Kaduna state with about 10,000 beneficiaries, but expanded to 22,380 in April 2020.
In May, a total of 12,566 new beneficiaries were added summing the figures to 34,956 beneficiaries in the state.
The state government had also commenced the process of capturing poor and vulnerable households into the social register in the remaining 14 LGAs, from which beneficiaries of the cash transfer would be extracted in subsequent months.
Evacuation: 247 Nigerians arrive home from Malaysia, Thailand
The returnees were evacuated with a chartered Air Peace flight APK-7813.
The Federal Government of Nigeria has safely evacuated and returned home, two hundred and forty-seven Nigerians who were stranded in Malaysia and Thailand.
The returnees were evacuated with a chartered Air Peace flight APK-7813 which arrived the Nnamdi Azikiwe International Airport, Abuja at about 11p.m. on Saturday.
Chartered @airpeace flight APK-7813 conveying 247 stranded Nigerians from Malaysia and Thailand arrived Nnamdi Azikiwe International Airport, Abuja at exactly 2300HRS, 11th of July 2020.
Some passengers disembarked in Abuja..
— Nigerians in Diaspora Commission (@nidcom_gov) July 12, 2020
According to Mr Gabriel Odu, the Head of Media and Public Relations Unit of the Nigerians in Diaspora Commission (NiDCOM) who spoke to NAN, some of the returnees disembarked in Abuja, while the others proceeded to Murtala Muhammed International Airport, Lagos.
In line with the protocols announced by the Presidential Task Force on COVID-19, all of the returnees presented a negative COVID-19 test result before boarding the evacuation flight, and upon arriving Nigeria, are expected to proceed on a 14-day self-isolation.
Since four weeks ago, from the federal government, through the ministry of Foreign Affairs announced the resumption of evacuation flights, hundreds of stranded Nigerians have been returned home to their families from different countries including the United States of America, United Kingdom, Egypt, Malaysia and Thailand.
The returnees bear the cost of their flight tickets and are expected to self-isolate for four weeks, upon their return to Nigeria. Returnees who receive a clean bill of health after the isolation, are given their passports and allowed to go home.