Nigeria’s Fixed Income and Currencies (FIC) markets turnover in July 2021 was N16.97trillion, representing a 10.84percent (N1.66trillion) month-on-month (MoM) increase and a 9.35percent (N1.75trillion) year-on-year (YoY) decrease from June 2021 and July 2020 turnover figures, respectively.
The most recent report on the Fixed Income and Currencies markets released by the FMDQ Securities Exchange Limited shows that Foreign Exchange (FX) and Money Market transactions were the highest contributors to the FIC markets turnover in July 2021.
Foreign Exchange and Money Market transactions jointly accounted for 64.87percent of the total FIC markets turnover. Total FX market turnover in July 2021 was $12.50billion (N5.14trillion), representing an MoM increase of 23.52percent ($2.38billion) from the turnover recorded in June 2021 ($10.12billion).
The MoM increase in total FX market turnover was jointly driven by the 29.23percent ($1.44billion) and 18.20percent ($0.94billion) MoM increase in FX Spot and FX Derivatives turnover respectively in July 2021.
The MoM increase in FX Derivatives turnover was driven by MoM increase in turnover for FX Swaps, FX Forwards and Other Derivatives by 31.03percent ($0.61billion), 19.24percent ($0.30billion) and 57.65percent ($0.42billion) respectively.
However, FX Futures decreased by 40.72percent ($0.38billion), resulting in the lower MoM increase in FX Derivatives turnover relative to the MoM increase in FX Spot turnover.
Consequently, the contribution mix of FX Spot and FX Derivatives to total FX market turnover changed to 50.95percent and 49.05percent, respectively.
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In the OTC FX Futures market, the near month contract (NGUS JUL 28, 2021) with a total outstanding notional value (NV) of $0.24billion matured and was settled, whilst a new long-term (60M) contract, NGUSJUL 29, 2026 was introduced at a Futures price of $/N614.32.
The total NV of open OTC FX Futures contracts as at July 30, 2021, stood at circa $4.22billion representing an MoM decrease of 0.71percent ($0.03billion) from its value as at June 30, 2021.
At the I&E FX Window, the Naira depreciated against the US Dollar, losing 0.02percent ($/N0.08) to close at an average of $/N411.38 in July 2021 from $/N411.30 recorded in June 2021 whilst trading within a range of $/N410.38 – $/N411.75 in July 2021.
Similarly, the Naira depreciated against the US Dollar in the parallel market, losing 1.16percent ($/N5.83) to close at an average of $/N506.40 in July 2021, and trading within a range of $/N503-$/N525.
Consequently, the average spread between the exchange rates in the formal (I&E FX Window) and unregulated (parallel) FX markets increased by $/N5.75 to $/N95.02 in July 2021.
In the primary markets, average discount rates for the 91-day and 182-day T.bills remained flat at 2.50percent and 3.50percent respectively, whilst the average discount rate for 364-day T.bills declined by 0.96 percentage points (ppts), to 8.44percent in July 2021.
Similarly, the average discount rates for CBN OMO7 bills for comparable tenors remained flat at a range of 7percent – 10.10percent in July 2021. The 10Y and 30Y FGN Bond were issued at 12.35percent and 13.25percent respectively, whilst the 20Y FGN Bond was reopened at 13.15percent in July 2021, relative to 15.92percent recorded at the previous auction in August 2017.
In July 2021, FGN Bonds was the highest contributor to turnover in the FI market, driven by the MoM increase in turnover by 46.97percent (N0.62trillion) and resulting in an increase in FGN Bonds trading intensity by 5bps to 0.16 from 0.11 in June 2021.
CBN Special Bills turnover also increased MoM by 5.49percent (N0.05trillion) in July 2021. However, T.bills and OMO Bills turnover decreased MoM by 2.92percent (N0.04trillion) and 5.99percent (N0.10trillion) respectively.
In July 2021, 3M – 6M T.bills were the most traded sovereign debt securities, accounting for 20.85percent (N0.69trillion) 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 29percent (N0.96trillion) of the total sovereign fixed income market turnover.
Yields decreased MoM across all tenors on the yield curve in July 2021, except for the 7Y and 15Y tenor which recorded a MoM increase in yields by 0.07ppts and 0.30ppts to 12.53percent and 13.11percent.
The yield spread between the 3M and 30Y sovereign debt securities increased by 1.20ppts to 9.28ppts in July 2021, indicating a slight steepening of the sovereign yield curve Real (inflation-adjusted) yields remained negative across the yield curve in July 2021.
Total turnover in the Money Market segment increased MoM by 3.35percent (N0.19trillion) to N5.86trillion in July 2021. This was driven by the MoM increase in Repos/Buy-backs turnover by 5.75percent (N0.31trillion). However, Unsecured Placements/Takings declined by 37.04percent (N0.10trillion) to N0.17trillion in July 2021.
The average OBB rate (secured lending rate) and overnight (O/N) rate decreased by 4.01percentage points (ppts) and 3.99ppts respectively, to close at 12.70percent and 13.20percent in July 2021.
The total number of executed trades reported on the Bloomberg E-Bond Trading System decreased MoM by 6.64percent (258) to 3,627 in July 2021 from 3,885 recorded in June 2021. This was driven by the MoM decrease in the number of trades for OMO bills and FGN Bonds in July 2021.
