Spot FX market turnover was $5.48 billion (N4.15 trillion) in September 2023, representing a Month-on-month (MoM) increase of 25.40% ($1.11 billion) from the turnover recorded in August 2023 ($4.37 billion).
This was contained in the FMDQ Markets Monthly Report for May seen by Nairametrics.
The report noted that in the FX Market, the US Dollar depreciated against the Naira, with the spot exchange rate ($/N) decreasing by 0.79% ($/N6.02) to close at an average of $/N757.02 in September 2023 from $/N763.04 recorded in August 2023.
“Further, exchange rate volatility increased in September 2023 as the Naira traded within an exchange rate range of $/N722.39 – $/N780.00 compared to $/N738.18 – $/N789.08 recorded in August 2023,” it said.
Spot Fixed Income Market
According to the report, FI’s market turnover recorded N9.23 trillion in September 2023, representing a MoM increase of 29.67% (N2.11 trillion) from the turnover recorded in August 2023 (N7.12 trillion).
FMDQ noted that the MoM increase in the FI market turnover was driven by the 25.74% (N0.47 trillion), 23.33% (N0.56 trillion), 23.95% (N0.33 trillion) and 50.08% (N0.76trillion) increase in turnover across T.Bills, OMO Bills, CBN Special Bills and FGN Bonds, offsetting the 9.63% (N0.003 trillion) MoM decline in Other Bonds transactions, respectively.
- “As a result, the trading intensity (TI) for T.Bills and FGN Bonds increased MoM by 0.09 and 0.04 to 0.48 and 0.12, respectively.
- T.bills and FGN Bonds within the >6M – 12M and >20Y tenors respectively were the most traded sovereign FI securities, accounting for 39.08% (N1.78 trillion) and 22.28% (N1.02 trillion) of the secondary market turnover for sovereign FI securities in the spot market.
- In September 2023, the yield spread between the 3M and 30Y sovereign FI securities increased by 0.51ppts to 11.14ppts, indicating a steepening of the sovereign yield curve.
- Real (inflation-adjusted) yields remained negative across the yield curve in September 2023, declining further on the back of surging inflation which remains higher than policy interest rates and outpace increase in nominal yields,” the report noted.
Money Market: According to the report, total turnover in the MM segment increased MoM by 30.67% (N1.87 trillion) to N7.95 trillion in September 2023.
- “The MoM increase was driven by the 27.48% (N1.63 trillion) and 147.15% (N0.24 trillion) uptick in Repos/Buy-backs and Unsecured Placement/Takings transactions, respectively.
- The average O/N rate and OPR rate (secured lending rate) decreased MoM by 0.34ppts and 0.37ppts respectively, to close at an average of 11.12% and 10.40% in September 2023,” the report noted.
FX Derivatives Market
FMDQ noted that total turnover in the FX derivatives market segment was $2.55 billion (N1.94 trillion) in September 2023, representing a MoM increase of 71.61% ($1.07 billion) from the August 2023 figures.
It said the MoM increase in the FX derivatives turnover was jointly driven by the 54.67% ($0.76 billion), 135.10% ($0.14 billion), and $0.17 billion increase in transactions across FX Swaps, FX Forwards, and FX Futures, respectively.
- “In the Cleared Naira-Settled Non-Deliverable Forwards market, the near month contract (NGUS SEP 27, 2023) expired, and open positions with a total notional value (NV) of $0.65 billion were settled.
- However, there was no new far-month (60M) contract introduced in the Cleared Naira Settled Non-Deliverable Forwards market in the review period.
- As a result, the cumulative NV of open Cleared Naira-Settled Non-Deliverable Forwards contracts decreased for the third consecutive month to circa $4.91 billion as of September 29, 2023.
- This represents a MoM decrease of 11.69% ($0.65 billion) and a YoY increase of 17.46% ($0.73 billion) from its value as of August 31, 2023 and September 30, 2022, respectively,” the report said.
The FMDQ Fixed Income and Currency (FIC) | FMDQ Group
