Spot FX market turnover was $4.66 billion (N3.66 trillion) in October 2023, representing a Month-on-month (MoM) decrease of 14.96% ($0.82 billion) from the turnover recorded in September 2023 ($5.48 billion).
This was contained in the FMDQ Markets Monthly Report for October seen by Nairametrics.
The report noted that in the FX Market, the US Dollar appreciated against the Naira, with the spot exchange rate ($/N) increasing by 5.34% ($/N40.41) to close at an average of $/N797.43 in Oct. 2023 from $/N757.02 recorded in Sep. 2023.
“Further, exchange rate volatility increased in October 2023 as the Naira traded within an exchange rate range of $/N741.85 – $/N993.82 compared to $/N722.39 – $/N780.00 recorded in September 2023.
Spot Fixed Income Market
According to the report, FI market turnover was N11.91 trillion in October 2023, representing a MoM increase of 29.04% (N2.68 trillion) from the turnover recorded in September 2023 (N9.23 trillion).
FMDQ noted that the MoM increase in the FI market turnover was driven by the 5.10% (N0.15 trillion), 170.76% (N2.92 trillion), and 24.06% (N0.01 trillion) increase in turnover across OMO Bills, CBN Special Bills, and Other Bonds, offsetting the 12.28% (N0.28 trillion) and 5.68% (N0.13 trillion) MoM decline in T.Bills and FGN Bonds transactions, respectively.
- “As a result, the trading intensity (TI) for T.Bills and FGN Bonds decreased MoM by 0.06 and 0.01 to 0.42 and 0.11, respectively.
- T.bills and FGN Bonds within the >6M – 12M and >20Y tenors respectively were the most traded sovereign FI securities, accounting for 33.97% (₦1.41trn) and 19.06% (₦0.79trn) of the secondary market turnover for sovereign FI securities in the spot market, respectively
- In October 2023, the yield spread between the 3M and 30Y sovereign FI securities decreased by 3.13ppts to 8.01ppts, indicating a flattening of the sovereign yield curve
- Real (inflation-adjusted) yields remained negative across the yield curve in October 2023, declining further on the back of surging inflation which remains higher than policy interest rates and outpace increase in nominal yields,” it said.
Money Market
According to the report, total turnover in the Money Market (MM) segment decreased MoM by 38.24% (N3.04 trillion) to N4.91 trillion in October 2023.
FMDQ noted that the MoM decrease was driven by the 36.03% (N2.72 trillion) and 80.00% (N0.32 trillion) decrease in Repos/Buy-backs and Unsecured Placement/Takings transactions, respectively.
- “The average O/N rate and OPR rate (secured lending rate) decreased MoM by 6.62ppts and 6.53ppts respectively, to close at an average of 4.50% and 3.87% in October 2023,” it said.
Derivatives Market
Total turnover in the FX derivatives market segment was $1.55 billion (N1.22 trillion) in October 2023, representing a MoM decrease of 39.27% ($1.00 billion) from the September 2023 figures.
The Exchange said that the MoM decrease in the FX derivatives turnover was jointly driven by the 40.19% ($0.86 billion), 28.00% ($0.07 billion), and 52.94% ($0.09 billion) decrease in transactions across FX Swaps, FX Forwards, and FX Futures, respectively.
In the Cleared Naira-Settled Non-Deliverable Forwards market, it noted that the near-month contract (NGUS OCT 25, 2023) expired and open positions with a total notional value (NV) of $0.74 billion were settled.
- “As a result, the cumulative NV of open Cleared Naira-Settled Non-Deliverable Forwards contracts decreased for the fourth consecutive month to circa $4.16bn as of October 31, 2023.
- This represents a MoM decrease of 15.27% ($0.75bn) and YoY increase of 1.22% ($0.05bn) from its value as of September 29, 2023 and August 31, 2022, respectively,” it noted.
