OTC FX futures market records $7bn transaction on FMDQ after one year

Over The Counter (OTC) FX Futures market has recorded a total of $7 billion contract traded on the FMDQ, the OTC FX Futures Exchange, after one year of launch by the Central Bank of Nigeria (CBN).
The 12th Naira-settled OTC FX Futures contract NGUS JUN 21 2017 with notional amount of $657.07 million, matured and settled on FMDQ on Wednesday, June 21, 2017, according to a report by FMDQ, which stated that for the first time, the Nigerian Autonomous Foreign Exchange (NAFEX) Fixing closed at a lower rate than the contract price, resulting in a net pay-out to the CBN.
Consequently, a new 12-month contract, NGUS JUN 27 2018 with notional amount $1 billion was offered by the CBN at N374.67. Also within this market, $56.37m was traded in three deals during the week-ended June 23, 2017, compared to the previous week’s total of $2.46m traded in one deal.
At the spot foreign exchange market, trading activities between the banks and their clients stood at $909.49m with average daily turnover of $181.90m, representing a 14.61% increase from the $793.56m with average daily turnover of $158.71m, recorded in the previous week.
Still on the same market, trading activities among banks for the same trading week revealed a 36.11% decrease, as a total turnover of $136.55m with average daily turnover of $27.31m was recorded against the $213.71m with average daily turnover of $42.74m reported the previous week.
Liquidity flows via the Investors’ & Exporters’ FX Window recorded a total of $450m for the week-ended June 16, 2017, a 16.80% increase from $385m reported the previous week, bringing the total volume traded in the Window from inception to $2.968bn.
In the Bureau de Change (BDC) market, the exchange rate close remained at $/N368 for the week-ended June 23, 2017, indicating no change from the closing rate recorded at the end of the previous week-ended June 16, 2017.
On the other hand, the CBN official rate rose marginally by $/N0.10 to close at $/N305.85, indicating a 0.03% increase when compared to $/N305.75 reported at the end of the previous week-ended June 16, 2017.
Consequently, the spread between the BDC and the CBN official exchange rates fell by $/N0.10 to $/N62.15, representing a 0.16% decrease from the spread of $/N62.25 recorded for the previous week-ended June 16, 2017.
The CBN continued its supply of US Dollars in the FX markets, offering $100m at a marginal rate of $/N320 via a single Secondary Market Intervention Sales (SMIS) – Wholesale session held during the week.

The nation’s currency on Friday strengthened further at all market segments following the sale of $240m to the Retail Secondary Market Intervention Sales (SMIS) for spot and forward deals.
The Apex Bank released the allocation in the last trading week ahead of the two days holiday declared by the Federal Government to commemorate the Moslem festival.
Consequently, after trading on Friday, the naira appreciated in value by N0.23 percent to close at N362.16k per dollar. This showed N0.84k gain over N363.00k to the dollar traded the previous day, data from FMDQ revealed.
At the interbank spot foreign exchange market, the local currency maintained gains as it closed at the rate of N305.85k per dollar. It also stabilised at between N366 and N367 per dollar at the black market.
The CBN also on Friday, confirmed the sale of forex to dealers in the Bureau de Change (BDC) segment of the market to meet the needs of low-end forex users.
According to the acting director, corporate communications at the CBN, Isaac Okorafor, the $240 million figure released to the Retail SMIS included deals initiated in the course of the out-going week.
While expressing delight at the stability in the forex market, Okorafor said the bank remained very optimistic that its goal of exchange rate convergence is fast becoming a reality, adding that the CBN was committed to ensuring liquidity in the forex market.
It would be recalled that the CBN, in its interventions last week, injected about $831.5 million in the interbank forex market and released figures indicating that the Bank had boosted transactions at the Investors’ and Exporters’ (I&E) segment of the market to the tune of $2.2 billion.
The central bank created a new forex window in April to allow investors to trade the naira at market-determined rates in a move intended to improve dollar supply and attract foreign investors who fled Nigeria at the start of the currency crisis.
Meanwhile, the naira continued to maintain its stability in the foreign exchange market, closing at an average of N365/$1 in the BDC segment of the market on Friday, June 23, 2017 at Abuja.
The central bank has sold more than $5 billion since it began its interventions in February, helping to restore confidence in the market.
Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), said the exchange rate has flattened for almost past two weeks and do not expect to see further shift from the current position.
“I expect to see the stability of the naira to continue,” Gwadabe told BusinessDay on phone yesterday.