Spot Market
Total spot market turnover for all products traded in the secondary market was N16.22trillion in September 2022, representing a month-on-month (MoM) increase of 20.50percent (N2.76trillion) from August 2022 figures.
The MoM increase in total spot market turnover was driven by an uptick in turnover across all products, especially FX turnover which increased MoM by 42.62percent (N1.07trillion), likewise Fixed Income and Money Market turnover in September 2022 increased by 16.94percent (N1.13trillion) and 13.15percent (N570billion), respectively.
The increase in Money Market (MM) turnover was solely driven by an Increase in Repos/Buy-Backs, offsetting the slump in Unsecured Placements/Takings. Similarly, the uptick in Fixed Income (FI) turnover was jointly driven by MoM increases in all Fixed Income products with the exception of CBN Special Bills.
Spot FX Market
Spot FX market turnover was N3.56trillion ($8.19billion) in September 2022, representing a MoM increase of 42.62percent (N1.07trillion) from the turnover recorded in August 2022 (N2.50trillion).
In the Spot FX Market, the Naira depreciated against the US Dollar, with the exchange rate ($/N) increasing by 1.41percent ($/N6.05) to close at an average of $/N435.83 in September 2022 from $/N429.78 recorded in August 2022.
Further, exchange rate volatility increased in September 2022 compared to August 2022 as the Naira traded within an exchange rate range of $/N430- $/N437.03 in September 2022 compared to $/N428.13 – $/N431.00 recorded in August 2022.
Spot Fixed Income (FI) Market
FI market turnover was N7.79trillion in September 2022, representing a MoM increase of 16.94percent (N1.13trillion) from the turnover recorded in August 2022 (N6.66trillion).
The MoM increase in the FI market turnover was driven by the increase in T.Bills, OMO Bills as well as FGN Bonds & Other Bonds turnover which offset the MoM marginal decrease of 28.12percent (N530billion) in CBN Special Bills turnover.
As a result, the trading intensity (TI) for T.bills, OMO Bills and FGN Bonds increased MoM by 0.15, 1.28 and 0.03 points to 0.45, 5.65 and 0.06, respectively.
T.bills and FGN Bonds within the >6M – 12M and >10Y – 15Y tenors respectively were the most traded sovereign FI securities, accounting for 55.29percent (N1.62trillion) and 8.19percent (N240billion) of the sovereign FI turnover in the spot market, respectively.
In September 2022, the yield spread between the 3M and 30Y sovereign FI securities increased by 6.17percentage points (ppts) to 8.65ppts, indicating a steepening of the sovereign yield curve. Real (inflation-adjusted) yields remained negative across the yield curve in September 2022.
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Spot Market – (Money Market)
Total turnover in the MM segment increased MoM by 13.15percent (N570billion) to N4.86trillion in September 2022. The MoM increase was solely driven by the 14.80percent (N620billion) rise in Repos/Buy-backs turnover despite the 49.04percent (N50billion) decrease in unsecured Placement/Takings turnover in the month of September 2022.
The average Overnight (O/N) rate and Open Repos (OPR) rate (secured lending rate) decreased MoM by 1.40ppts and 1.45ppts respectively, to close at an average of 12.36percent and 11.89percent in September 2022.
Derivatives Market
Derivatives Market – (FX Market)
Total turnover in the FX derivatives market segment was N3.64trillion ($8.37billion) in September 2022, representing a MoM increase of 75.75percent (N1.57trillion) from August 2022 figures.
The MoM increase in the FX derivatives turnover in September 2022 was driven jointly by the 37.53percent (N280billion), 84.83percent (N800billion) and 126.61percent (N490billion) uptick across FX Forwards, FX Swaps and FX Futures turnover, respectively.
Sovereign Securities
The Debt Management Office (DMO) sold T.Bills valued at N553.66billion across its auctions in September 2022, representing a 24.10percent (N107.51billion) MoM increase on the value of T-bills sold across its auctions in August 2022 (N446.15billion).
Similarly, the DMO sold two (2) 10-year and one (1) 20-year FGN Bonds worth N261.50billion via re-openings in September 2022 (exceeding the total amount of FGN Bonds offered1 by N36.50billion).
Likewise, this represents a 30.37percent (N60.92billion) month-on-month (MoM) increase relative to the amount sold in August 2022 (N200.58billion) for the same FGN Bond maturities.
In September 2022, the Central Bank of Nigeria (CBN) sold OMO Bills worth N25.60billion exceeding the amount offered by 28percent (N5.60billion), representing the first issuance since June 2022.
Non-Sovereign Securities
There were no corporate bonds listed on FMDQ Exchange in September 2022 compared to N27.28billion worth of corporate bonds listed in August 2022. As a result, the total outstanding value for corporate bonds decreased MoM by 0.91percent (N10.78billion) to N1.169trillion.
Total value of Commercial Papers (CPs) quoted on FMDQ Exchange in September 2022 was N22.40billion, representing a month-on-month (MoM) decrease of 22.91percent (N6.66billion) from the value of CPs quoted in August 2022.
Quoted CPs were issued by institutions from various sectors including Financial Services (2), Agriculture (4), Real Estate (1) and Manufacturing (2).
In September 2022, CPs with a total value of N29.56billion matured and were redeemed resulting in a MoM decrease of CPs outstanding by 1.45percent (N7.16billion) to N487.73billion.
Naira-settled OTC FX Futures Market
In the OTC FX Futures market, the near month contract (NGUS SEP 28, 2022) expired and open positions with a total notional value (NV) of $0.65billion were settled.
A far month (60M) contract, NGUS SEP 29, 2027 was introduced at a Futures rate of $/N659.31, representing an increase of 1.08percent ($/N7.02) in the Futures price relative to the Futures price ($/N652.29) of the previous far month contract (NGUS AUG 25, 2027).
The total NV of open OTC FX Futures contracts as at September 30, 2022, stood at circa $4.18billion representing a MoM increase of 9.14percent ($0.35billion) and a year-on-year (YoY) decrease of 15.04percent ($0.74billion) from its value as at August 31, 2022 and September 30, 2021, respectively.
The total NV of OTC FX Futures contracts traded in September 2022 was $1billion, representing a MoM increase of 79.55percent ($0.44billion) relative to the turnover reported for August 2022 ($0.56billion).
In September 2022, OTC FX Futures market activity was concentrated within the 13 – 18M tenor range, which accounted for 65.59percent ($0.65billion) of the total turnover and thirty (30) of the sixty-two (62) deals conducted during the period under review.
The NV of OTC FX Futures contracts traded across short-dated (0 – 12M) contracts decreased by 36.80percent ($0.20billion) to $0.34billion while the NV of OTC FX Futures contracts traded across the long-dated (13 – 60M) contracts increased by 4571.08percent ($0.64billion) to $0.65billion.
Average price of OTC FX Futures contracts and Deliverable Forwards in September 2022 increased MoM across all tenor buckets relative to August
2022. The average price of OTC FX Futures contracts within the 0 – 6M tenor range recorded the highest increase in price (that is, expected depreciation of Nigerian Naira against the US Dollar) in September 2022. Conversely, the highest MoM increase in the price of Deliverable Forwards in September 2022 was recorded on the farthest tenored contract (that is, 12-Month contract).
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