Spot FX market turnover in November 2023 was $5.17 billion (N4.33 trillion), representing a Month-on-month (MoM) increase of 10.94% ($0.51 billion) from the turnover recorded in October 2023 ($4.66 billion).
This was contained in the FMDQ Markets Monthly Report for October seen by Nairametrics.
The report noted that in the FX Market, the Naira depreciated against the US Dollar, with the spot exchange rate (N/$) decreasing by 4.41% ($/N35.14) to close at an average of N832.57/$ in November 2023 from N797.43/$ recorded in Oct. 2023.
It added further that exchange rate volatility decreased in November 2023 as the Naira traded within an exchange rate range of N750.14/$ – N996.75/$ compared to N741.85/$ – N993.82/$ recorded in October 2023.
Spot Fixed Income Market
According to the report, FI’s market turnover in November 2023 was N14.73 trillion, representing a MoM increase of 23.68% (N2.82 trillion) from the turnover recorded in October 2023 (N11.91 trillion).
FMDQ noted that the MoM increase in the FI market turnover was driven by 161.50% (N3.23 trillion), 21.76% (N0.47 trillion), 4.10% (N0.19 trillion) and 8.97% (N0.001 trillion) increase in turnover across T.Bills, FGN Bonds, CBN Special Bills and Other Bonds, offsetting the 34.95% (N1.08 trillion) and 37.50% (N0.03 trillion) MoM decline in OMO Bills and Unsecured Placement/Takings transactions, respectively.
- “As a result, the trading intensity (TI) for T.Bills and FGN Bonds increased MoM by 0.58 and 0.02 to 1.00 and 0.13, respectively.
- T.bills and FGN Bonds within the >6M – 12M and >20Y tenors respectively were the most traded sovereign FI securities, accounting for 54.33% (₦4.27trn) and 14.50% (₦1.14trn) of the secondary market turnover for sovereign FI securities in the spot market, respectively.
- In November 2023, the yield spread between the 3M and 30Y sovereign FI securities increased by 2.93ppts to 10.94ppts, indicating a steepening of the sovereign yield curve
- Real (inflation-adjusted) yields remained negative across the yield curve in November 2023, declining further on the back of surging inflation which remains higher than policy interest rates and continues to outpace increase in nominal yields,” it said.
Money Market
According to the report, total turnover in the Money Market (MM) segment increased MoM by 18.94% (N0.93 trillion) to N5.84 trillion in November 2023.
FMDQ noted that the MoM increase was solely driven by the 19.88% (N0.96 trillion) increase in Repos/Buy-backs, which offset the 37.50% (N0.03 trillion) decline in Unsecured Placement/Takings transactions, respectively.
- “The average O/N rate and OPR rate (secured lending rate) increased MoM by 15.41ppts and 15.13ppts respectively, to close at an average of 19.91% and 19.00% in November 2023,” it said.
FX Derivatives Market
Total turnover in the FX derivatives market segment in November 2023 was $3.55 billion (N2.98 trillion), representing a MoM increase of 129.03% ($2.00 billion) from the October 2023 figures.
The Exchange said that the MoM increase in the FX derivatives turnover was solely driven by the 164.06% ($2.10 billion) increase in FX Swaps turnover, which offset the 5.56% ($0.01 billion) decline in FX Forwards transaction whilst there was no activity across FX Futures transactions.
In the Cleared Naira-Settled Non-Deliverable Forwards market, the near month contract1 (NGUS NOV 29, 2023) expired and open positions with a total notional value (NV) of $0.61 billion were settled. However, there was no new 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 fifth consecutive month to circa $3.55 billion as of November 30, 2023.
- This represents a MoM and YoY decrease of 14.66% ($0.61 billion) and 11.91% ($0.48 billion), respectively,” it noted.
What you should know
Total spot market turnover for all products traded in the secondary market in November 2023 was N24.89 trillion, representing a MoM increase of 21.53% (N4.41 trillion) from the October 2023 figures.
The MoM increase in total spot market turnover was jointly driven by an increase in turnover across all spot market product categories, with contributions by FX, MM, and FI transactions increasing MoM by 18.31% (N0.67 trillion), 18.94% (N0.93 trillion) and 23.68% (N2.82 trillion), respectively.
The increase in MM turnover was solely driven by an uptick in Repos/Buy-backs, offsetting the MoM decline in Unsecured Placement/Takings transactions.
In contrast, the uptick in FI turnover was driven by a MoM increase across all FI products, excluding OMO Bills which decreased in the review period.