Nigeria’s recorded N14.23 trillion turnover in the Fixed Income and Currencies (FIC) markets in February 2022, which represents a month-on-month (MoM) increase of 0.71percent (N100billion) and a year-on-year (YoY) decrease of 24.67percent (N3.51trillion) from turnover in January 2022 and February 2021, respectively, according to FMDQ Securities Exchange Limited (FMDQ Exchange) recently released monthly report.
Ahead of this month-end, FMDQ Exchange released the February report on Monday, March 21 which shows that Foreign Exchange (FX), CBN Special Bills and OMO bills were the highest drivers of market turnover, jointly accounting for 55.92percent of the total FIC markets turnover in February 2022.
Total FX market turnover in February 2022 was $9.75billion (N4.06trillion), representing a MoM decrease of 3.75percent ($380million) from the turnover recorded in January 2022 ($10.13billion). The MoM decrease in total FX market turnover was solely driven by the 14.88percent ($970million) decrease in FX Spot despite the 16.34 percent ($590million) MoM increase in FX Derivatives turnover in February 2022.
The MoM increase in FX Derivatives turnover was driven by MoM increase in turnover for FX Swaps and FX Futures by 42.37percent ($570million) and 55.10percent ($110million), respectively despite the 3.83percent ($80million) decrease in FX Forwards. Consequently, the contribution of FX Derivatives to total FX market turnover increased by 7.45 percentage points (ppts) to 43.07percent in February 2022.
In the OTC FX Futures market, the near month contract (NGUS FEB 23, 2022) expired and open positions with a total notional value (NV) of $570million were settled. A far month (60M) contract, NGUS FEB 24, 2027 was introduced at a Futures price of $/N626.97.
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The total NV of open OTC FX Futures contracts as at February 28, 2022, stood at circa $4.43billion representing a MoM and YoY decrease of 9.59percent ($470million) and 25.80percent ($1.54billion) from its value as at January 31, 2022, and February 28, 2021, respectively.
In the FX Market, the Naira appreciated against the US Dollar, gaining 0.06percent ($/N0.23) to close at an average of $/N416.32 in February 2022 from $/N416.55 recorded in January 2022. Further, exchange rate volatility decreased in February 2022 compared to January 2022 as the Naira traded within an exchange rate range of $/N415.75 – $/N416.75 in February 2022 compared to $/N415.33 – $/N422.67 recorded in January 2022.
In the primary markets, average discount rates across all tenors for T.bills declined by an average of 0.29ppts in February 2022 ranging between 2.36percent – 4.78percent. Average discount rates for CBN OMO bills with comparable tenors remained flat within the range of 7.00percent – 10.10percent in February 2022.
In February 2022, the coupon rates of reopened issues of 10Y decreased by 0.55ppts to 10.95percent from 11.50percent recorded in January 2022 while the 20Y FGN Bonds remained constant at 13percent in February 2022.
In February 2022, OMO bills were the most traded Fixed Income (FI) securities, with a 14.76percent (N400billion) MoM increase in turnover. Trading intensity for OMO bills increased by 92 basis points (bps) to 2.65 from 1.73 in January 2022.
Similarly, turnover across other fixed income products such as T.bills and FGN bonds also increased MoM in February 2022, while turnover for CBN Special Bills and Other Securities decreased MoM by 28.83percent (N320billion) and 40percent (N20billion) respectively in February 2022.
In February 2022, T.bills within the >6M – 12M tenor range were the most traded sovereign debt securities, accounting for 38.76percent (N1.31trillion) of the total turnover for sovereign debt securities, while FGN Bonds with term-to-maturity of >3Y – 5Y were the most traded long-term sovereign debt securities, accounting for 19.82percent (N670billion) of the total turnover for sovereign debt securities.
In February 2022, the yield spread between the 3M and 30Y sovereign debt securities increased by 0.39percentage points (ppts) to 8.80ppts, indicating a steepening of the sovereign yield curve. Despite the moderation in Headline Inflation, real (inflation-adjusted) yields remained negative across the yield curve in February 2022.
Total turnover in the Money Market segment decreased MoM by 25.52percent (N980billion) to N2.86trillion in February 2022. The MoM decrease was driven by the 25.40percent (N960billion) and 33.33percent (N20billion) decrease in Repos/Buybacks and Unsecured Placement/Takings turnover, respectively.
The average Overnight (O/N) rate and Open Repo (OPR) rate (secured lending rate) decreased by 3.21ppts and 3.04ppts respectively, to close at an average of 6.70percent and 6.29percent in February 2022.
The total number of executed trades reported on FMDQ Trading Systems increased MoM by 22.96percent (965) to 5,168 in February 2022, driven by the MoM increase in trading activity across all FI products excluding CBN Special Bills which decreased MoM by 31.49percent. Daily average trade size in February 2022 was N230billion compared to N190billion in January 2022.
