Spot foreign exchange (FX) market turnover in March 2024 stood at $12.61 billion (N19.29 trillion), representing a month-on-month (MoM) increase of 47.66% ($4.07 billion) from what was recorded in February 2024 ($8.54 billion).
This was contained in the FMDQ Markets Monthly Report for March seen by Nairametrics
The report noted that in the FX market, the US Dollar marginally depreciated against the Naira, with the spot exchange rate ($/N) decreasing by 0.06% ($/N0.97) to close at an average of $/N1,524.04 in March 2024 from $/N1,525.01 recorded in Feb. 2024.
The report said exchange rate volatility increased in March 2024 as the Naira traded within an exchange rate range of $/N1,300.43 – $/N1,627.40 compared to $/N1,418.78 – $/N1,665.50 recorded in February 2024.
Recommended reading: FX spot market posts $4.03 billion turnover in January
Spot fixed income market
According to the report, fixed income(FI) market turnover in March 2024 stood at N12.04 trillion, representing a MoM increase of 13.22% (N1.42 trillion) from what was recorded in February 2024 (N10.71 trillion).
FMDQ noted that the MoM uptick in the FI market turnover was driven by the 33.36% (N1.40 trillion), 45.45% (N0.86 trillion), and 17.76% (N0.15 trillion) increase in turnover across treasury bills, FGN bonds, and special bills, offsetting the 28.96% (N1.06 trillion) and 28.52% (N0.02 trillion) decline in open market operations (OMO) bill and other bonds transactions.
- “As a result, the trading intensity (TI) for FGN Bonds and T.Bills increased MoM by 0.04bps and 0.03bps to 0.12 and 0.60, respectively
- bills with term-to-maturity (TTM) between >6M – 12M and FGN Bonds with TTM between >5Y – 10Y, were the most traded sovereign FI securities, accounting for 56.87% (N4.76 trillion) and 12.90% (N1.08 trillion) of the secondary market turnover for sovereign FI securities in the spot market, respectively.
- In March 2024, the sovereign yield curve experienced an increase in level and a corresponding 3.01ppts MoM increase in yield spread1 to 4.43ppts, indicating a flattening and potential inversion of the yield curve.
- Real (inflation-adjusted) yields remained negative across the yield curve in March 2024, declining further on the back of surging inflation which remains higher than policy interest rates and continues to outpace the increase in nominal yields,” it said.
Money market
According to the report, total turnover in the money market (MM) segment increased MoM by 18.77% (N1.88 trillion) to N11.87 trillion in March 2024. The MoM increase was solely driven by the 18.85% (N1.88 trillion) increase in Repos/Buy-backs, offsetting the 31.89% (N0.01 trillion) decrease in unsecured placement/takings transactions, respectively.
- “The average O/N rate and OPR rate (secured lending rate) increased MoM by 8.17ppts and 8.27ppts respectively, to close at an average of 29.30% and 28.46% in March 2024,” it said.
FX derivatives market
Total turnover in the FX derivatives market segment in March 2024 was $3.70 billion (₦5.66 trillion), representing a MoM decrease of 18.98% ($0.87 billion) from the February 2024 figures.
The Exchange said that the MoM decrease in the FX derivatives turnover was solely driven by the 28.52% ($1.11bn) decline in FX swaps transactions, offsetting the 36.47% ($0.24 billion) increase in FX forwards turnover and lack of activity in the FX futures market.
In the cleared Naira-settled (USD/NGN) non-deliverable forwards market, the near month contract (NGUS MAR 27, 2024) expired and opened positions with a total notional value (NV) of $0.19bn 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, continuing the trend since August, 2023.
Consequently, the TTM of the farthest open contract is 53 months (i.e., NGUS AUG 30, 2028 contracts).
- “As a result, the cumulative NV of open Cleared Naira-Settled Non-Deliverable Forwards contracts declined for the ninth consecutive month to circa $2.09bn as at March 28, 2024, representing a MoM and YoY decrease of 8.33% ($0.19 billion) and 59.34% ($3.05 billion), respectively,” it noted.
What you should know
Total spot market turnover for all products traded in the secondary market in March 2024 was N43.20 trillion, representing a MoM increase of 29.05% (N9.73 trillion) from February 2024 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 51.01% (N6.52 trillion), 18.77% (N1.88 trillion) and 12.45% (N1.33 trillion), respectively.
The uptick in MM turnover was solely driven by the MoM increase in Repos/Buy-backs, offsetting the MoM decrease in Unsecured Placement/Takings transactions.
Similarly, the surge in FI turnover was jointly driven by a MoM increase across all FI products excluding OMO Bills and other bonds which declined in the review period.
