Spot FX market turnover in January 2024 was $4.37 billion (N4.03 trillion), representing a Month-on-month (MoM) decrease of 40.46% ($2.97 billion) from the turnover recorded in December 2023 ($7.34 billion).
This was contained in the FMDQ Markets Monthly Report for October seen by Nairametrics.
The report noted that in the FX Market, the US Dollar appreciated against the Naira, with the spot exchange rate ($/₦) increasing by 10.44% ($/₦93.66) to close at an average of $/₦990.96 in January 2024 from $/₦897.30 recorded in Dec. 2023.
It added further that exchange rate volatility increased in January 2024 as the Naira traded within an exchange rate range of $/N838.95 – $/N1,482.57 compared to $/N806.73 – $/N1,099.05 recorded in December 2023.
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Spot Fixed Income Market
According to the report, FI’s market turnover in January 2024 was N7.19 trillion, representing a MoM decrease of 55.92% (N9.12 trillion) from the turnover recorded in December 2023 (N16.31 trillion).
FMDQ noted that the MoM decrease in the FI market turnover was driven by 62.31% (N3.24 trillion), 2.54% (N0.06 trillion), 79.50% (N3.49 trillion), 53.27% (N2.28 trillion) and 59.45% (N0.05 trillion) decrease in turnover across T.Bills, OMO Bills, CBN Special Bills, FGN Bonds and Other Bonds, respectively.
- “As a result, the trading intensity (TI) for T.Bills and FGN Bonds decreased MoM by 0.56bps and 0.11bps to 0.30 and 0.10, respectively
- T.bills and FGN Bonds within the >6M – 12M and >20Y tenors respectively were the most traded sovereign FI securities, accounting for 35.86% (N1.42 trillion) and 26.52% (N1.05 trillion) of the secondary market turnover for sovereign FI securities in the spot market.
- In January 2024, the yield spread between the 3M and 30Y sovereign FI securities decreased MoM by 2.97ppts to 9.37ppts, indicating a flattening of the sovereign yield curve
- Real (inflation-adjusted) yields remained negative across the yield curve in January 2024, 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 MM segment decreased MoM by 21.45% (N1.54 trillion) to N5.64 trillion in January 2024.
FMDQ noted that the MoM decrease was solely driven by the 21.96% (N1.57 trillion) decrease in Repos/Buy-backs, offsetting the 100.00% (N0.03 trillion) increase in Unsecured Placement/Takings transactions, respectively.
- “The average O/N rate and OPR rate (secured lending rate) decreased MoM by 0.39ppts and 0.76ppts respectively, to close at an average of 17.56% and 16.49% in January 2024,” it said.
FX Derivatives Market
Total turnover in the FX derivatives market segment in January 2024 was $4.56 billion (N4.21 trillion), representing a MoM decrease of 29.52% ($1.91 billion) from the December 2023 figures.
The Exchange said that the MoM decreases in the FX derivatives turnover were jointly driven by the 27.67% ($1.71 billion), 62.50% ($0.15 billion), and 100.00% ($0.05 billion) decrease in FX Swaps, FX Forwards and FX Futures transactions, respectively.
In the Cleared Naira-Settled (USD/NGN) Non-Deliverable Forwards market, the near month contract (NGUS JAN 31, 2024) expired and open positions with a total notional value (NV) of $0.57 billion were settled.
However, no new month (60M) contract was 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 seventh consecutive month to circa $2.63 billion as of January 31, 2024.
- This represents a MoM and YoY decrease of 17.81% ($0.57 billion) and 41.56% ($1.87 billion), respectively,” it noted.
What you should know
Total spot market turnover for all products traded in the secondary market in January 2024 was ₦16.86 trillion, representing a MoM decrease of 43.87% (N13.18 trillion) from December 2023 figures.
The MoM decrease in total spot market turnover was jointly driven by a decrease in turnover across all spot market product categories, with contributions by FX, MM, and FI transactions decreasing MoM by 38.47% (N2.52 trillion), 21.45% (N1.54 trillion) and 55.92% (N9.12 trillion), respectively.
The decrease in FI turnover was jointly driven by a MoM decline across all FI products. Similarly, the decrease in MM turnover was solely driven by a decline in Repos/Buy-backs, offsetting the MoM increase in Unsecured Placement/Takings transactions.
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