Volume of trade reported on the three foreign exchange windows in Nigeria fell by an average of 33.64 percent for the week ended March 8, 2019.
According to the figures by FMDQ OTC, the total value of trades recorded in the Investors’ & Exporters’ (I&E) for the review week closed at $2.67 billion, representing a decrease of 37.62 percent ($1.61 billion) compared to the $4.28 billion reported in the week ending March 1, 2019.
Trading activities on the Spot FX market between the Dealing Member Banks (DMBs) and their clients stood at $2,760.93 million (average daily turnover of $552.19 million), representing a decrease of 31.91 percent when compared to the $4,054.78 million (average daily turnover of $810.96 million) recorded the week ended March 1, 2019.
The review of trading activities in the Spot FX market amongst banks, as analysed from FMDQ figures, was not different as it was down by 31.41 percent. A total turnover of $395.20 million (average daily turnover of $79.04 million) was recorded, against $576.14 million (average daily turnover of $115.23 million) reported the week ended March 1, 2019.
Responding on the FX market performance, an exchange analyst said it must have been market going back to its normal level.
“The values reported before were as a result of the after- election effect but the market is stabilising now and the reality is what we see in the trading activities,” said a Lagos-based commodity exchange analyst who does not want to be identified.
The first analyst opinion was supported by a source at the Security and Exchange Commission, who said, “Nothing significant happened, it is just market returning back to its normal level.”
“More money came into the market the week before and the report for the week ended March 15 will help to better tell if there is major outflow,” said the analyst who spoke to BusinessDay on the condition of anonymity.
Gbolahan Ologunro, research analyst at CSL Stockbrokers, told BusinessDay that immediately after the election there was a surge on the inflow into the country.
“And there was a rally in the fixed-income market but yields are at the level where investors are comfortable and are not increasing their investment due to higher yields from other markets,” Ologunro said.
A further analysis of the FMDQ data revealed that the year-to-date (YTD) value of trades on I&E window stood at $15.63 billion as at March 8, 2019.
The I&E window was created in April 2017 by the Central Bank of Nigeria (CBN) to boost liquidity in the FX market and ensure timely execution and settlement for eligible transactions as stipulated by the apex bank.
The report by FMDQ also revealed that the CBN in its periodic supply of United States (US) dollars in the FX market, aimed at stabilising the naira, intervened in the market with $100.00 million to the Secondary Market Intervention Sales (SMIS) Wholesale window on March 12, 2019.
The apex bank also sold $55.00 million each to both the Small and Medium-scale Enterprises (SMEs) and the Retail.
The effort by Nigeria’s highest lender to maintain the country’s currency value seems to have been evident in the I&E Window as the naira appreciated at the FX Window, gaining N0.24 to close at $/N360.18 when compared to $/N360.42 recorded the previous week, resulting in a spread of $/N0.18 between the BDC market rate and I&E FX Window rate.
In the Bureau-de-Change (BDC) market, the exchange rate remained unchanged at $/N360.00
The spread between the BDC market rate and the CBN official exchange rate fell by N0.05 to close at $/N53.05, indicating a decrease of 0.09 percent from the $/N53.10 recorded in the previous week.
Meanwhile, $588.74 million worth of OTC FX Futures contracts was traded in 38 deals for the week ended March 15, 2019, compared to the total for the previous week ended March 8, 2019 traded in 22 deals.
Endurance Okafor
