For the month ended June 30, the turnover in the Fixed Income and Currencies (FIC) markets was N15.31trillion, representing a month-on-month (MoM) increase by 49.51percent (N5.07trillion), and a year-on-year (YoY) decrease by 7.04percent (N1.16trillion), according to FMDQ Securities Exchange.
FMDQ in its monthly report for June noted that Foreign Exchange (FX) and Money Market transactions were the highest contributors to the FIC markets turnover in June 2021, jointly accounting for 64.18percent of the total FIC markets turnover.
Total FX market turnover in June 2021 was $10.12billion (N4.16trillion), representing a MoM increase of 38.44percent ($2.81billion) from the turnover recorded in May 2021 ($7.31billion). The MoM increase in total FX market turnover was jointly driven by the 17.90percent ($0.75billion) and 65.73percent ($2.06billion) increase in FX Spot and FX Derivatives turnover respectively in June 2021.
The MoM increase in FX Derivatives turnover was driven by MoM increase in turnover across all derivative products, as FX Swaps, FX Forwards, FX Futures and Other Derivatives turnover increased by 88.07percent ($0.92billion), 19.80percent ($0.26billion), 118.18percent ($0.51billion) and 106.84percent ($0.37billion) respectively.
In the OTC FX Futures market, the near month contract (NGUS JUN 30, 2021) with a total outstanding notional value (NV) of $0.29billion matured and was settled, whilst a new long-term (60M) contract, NGUS JUN 24, 2026 was introduced at a Futures price of $/N613.76.
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The total NV of open OTC FX Futures contracts as at June 30, 2021 stood at circa (c) $4.25billion representing a MoM increase of 7.32percent ($0.29billion) from its value as at May 31, 2021, and a reversal in the downward trend witnessed since May 2020.
At the I&E FX Window, the Naira depreciated against the US Dollar, losing 0.01percent ($/N0.03) to close at an average of $/N411.30 in June 2021 from $/N411.27 recorded in May 2021 whilst trading within a range of $/N410 and $/N412 in June 2021.
Similarly, the Naira depreciated against the US Dollar in the parallel market, losing 2.94percent ($/N14.29) to close at an average of $/N500.57 in June 2021 from $/N486.28 recorded in May 2021. Consequently, the average spread between the exchange rates in the formal (I&E FX Window) and unregulated (parallel) FX markets increased by $/N14.26 to $/N89.27 in June 2021.
In the primary markets, average discount rates for the 91-day and 182-day T.bills remained constant MoM at 2.50percent and 3.50percent respectively, whilst the average discount rate for 364-day T.bills declined by 0.30 percentage points (ppts), to close at 9.40percent in June 2021. However, the average discount rates for CBN OMO bills for comparable tenors remained constant at a range of 7percent – 10.10percent in June 2021.
The coupon rates for the 10Y, 15Y and 30Y FGN10 bond issuances declined by an average of 0.45ppts to close at a range of 12.74percent -13.70percent from 13.10percent – 14.20percent recorded in May 2021.
Turnover increased MoM across all products in June 2021, excluding FGN Bonds turnover which declined marginally by 1.49percent (N0.02trillion).
However, FGN Bonds trading intensity remained constant at 0.11. In June 2021, trading intensity for OMO Bills and T.bills increased to 0.69 and 0.48 respectively from 0.40 and 0.32 in May 2021.
In June 2021, 3M – 6M T.bills were the most traded sovereign debt securities, accounting for 28.71percent (N0.79trillion) of the total sovereign Fixed Income market turnover, while FGN Bonds with term-to-maturity of 20Y or higher were the most actively traded long-term sovereign debt securities, accounting for 23percent (N0.63trillion) of the total sovereign Fixed Income market turnover.
There was a marginal MoM upward shift in short-term yields (3M– 1Y) whilst long-term yields (2Y – 30Y) declined in June 2021. The yield spread between the 3M and 30Y sovereign debt securities decreased by 1.50percentage points (ppts) to 8.08ppts in June 2021, indicating a flattening of the sovereign yield curve. Real (inflation-adjusted) yields remained negative across the yield curve in June 2021.
Total turnover in the Money Market segment increased MoM by 100.35percent (N2.84trillion) to N5.67trillion in June 2021. This was driven by the MoM increase in Repos/Buy-backs turnover and Unsecured Placements/Takings by 102.63percent (N2.73trillion) and 58.82percent (N0.10trillion) respectively. The average open buy back (OBB) rate (secured lending rate) and overnight (O/N) rate increased by 1.40ppts and 1.31ppts respectively, to close at 16.71percent and 17.19percent in June 2021.
The total number of executed trades reported on the Bloomberg EBond Trading System increased MoM by 14.10percent (480) to 3,885 in June 2021 from 3,405 recorded in May 2021. This was driven by the MoM increase in the number of trades for T.bills, OMO bills and FGN bonds in June 2021.
