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Nigeria’s fixed income, currency markets turnover hits new high of N16.45trn

Turnover in Nigeria’s fixed income and currency (FIC) markets for the month ended January 31, 2020 reached a new high of N23.19trillion.

This record FIC markets turnover represents month-on-month (MoM) increase of 40.97percent (N6.74trillion) from the turnover recorded in December 2019 (N16.45trillion), FMDQ Securities Exchange report shows.

On a year-on-year (YoY) basis it increased by 53.78percent (N8.11trillion) from the turnover recorded in January 2019 (N15.08trillion).  Foreign Exchange (FX) and OMO bills remained the most actively traded products, jointly accounting for 67.02percent of the total FIC market turnover recorded in January 2020.

Total FX market turnover in January 2020 was $24.35billion (N8.85trillion), representing a 31.71percent ($5.86billion) MoM increase from the turnover recorded in December 2019.

Analysis of FX market turnover by trade type indicated MoM increases across all categories, with Member-Client trades recording the highest MoM increase at 36.15percent ($3.87bn).

Additionally, analysis by product type indicated that the MoM increase in FX turnover was driven more by the 40.47percent ($3.42billion) increase in FX Derivatives turnover, which accounted for 58.35percent of the MoM increase in total FX market turnover compared to the 24.33percent ($2.44billion) increase in FX Spot turnover.

In the OTC FX Futures Market, the near month OTC FX Futures contract (NGUS JAN 29 2020) with a total open contract value of $1.57billion matured and was settled, and a new far month contract, NGUS FEB 24 2021 was introduced at an initial contract rate of $/N365.71.

The total value of open OTC FX Futures contracts as at January 31, 2020 stood at circa $9.77billion representing a 10bps (circa $0.01billion) increase on the value of open contracts as at December 31, 2019 (circa $9.67billion), while the total value of contracts settled since inception to date stands at circa $25.53billion.

The CBN Official Spot US$/N exchange rate closed at $/N307 in January 2020, while, the Nigerian Naira appreciated against the US Dollar in the parallel market by $/N2 to close at $/N360 (December 31, 2019 – $/N362).

Similarly, the Naira appreciated against the US Dollar at the Investors’ and Exporters’ (I&E) FX Window by $/N0.54 ($/N364.51 as at December 31, 2019) to close at $/N363.97 in January 2020 Fixed Income Market (T.bills, OMO bills and FGN Bonds).

At the end of January 2020, the outstanding value of T.bills increased MoM by 2.71percent (N0.07trillion) to N2.65trillion, similarly, the outstanding value of FGN Bonds increased MoM by 4.35percent (N0.41trillion) to N9.84trillion. However, the outstanding value of OMObills decreased by 6.23percent (N0.81trillion) MoM to close at N12.20trillion in January 2020.

Trading intensity for T.bills decreased further to 0.17 in January 2020 from 0.19 recorded in December 2019, while the trading intensity for OMO bills increased to 0.53 from 0.27over the same period.

The increase in the trading intensity of OMO bills was driven jointly by the 78.40percent (N2.94trillion) MoM increase in OMO bills turnover in January 2020, as well as the decrease in OMO bills outstanding.

However, the trading intensity for FGN Bonds increased marginally to 0.31 in January 2020 from 0.30 recorded in December 2019 due to the 5.43percent (N0.15trillion) MoM increase in FGN Bonds turnover.

Year-to-date (YtD) trading intensity for bills (combined for T.bills and OMO bills) and FGN Bonds stood at 0.47 and 0.31 respectively compared to 0.46 and 0.08 recorded in the corresponding period in 2019.  In January 2020, T.bills and OMO bills within the 6M – 12M maturity bucket were the most traded across all tenors on the sovereign yield curve, accounting for 44.08percent of the total Fixed Income market turnover.

FGN Bonds within the 20Y – 30Y maturity bracket were the most traded among the medium to long-term securities (that is 5Y – 30Y), accounting for 13.13percent of the total Fixed Income market turnover.

Weighted average yields on short and long-term fixed income maturities decreased by 3.02percent and 0.87percent respectively in January 2020. However, weighted average yields on medium-term fixed income maturities increased by 8.95percent in January 2020, due to the increase in weight for the 7Y – 10Y maturity bucket.

In addition, the average stop rates for T.bills at the primary market declined in January 2020 from December 2019 across all tenors. The minimum tenor for new OMO bills issued in January 2020 was 361-day, with average stop rates declining by 8bps to 13.20percent in January 2020 from 13.28percent recorded in December 2019.

Total turnover in the Money Market increased MoM by 59.85percent (N1.61trillion) to N4.29trillion in January 2020, this was driven by the Repurchase Agreements/Buy-Backs segment which increased MoM by 60.49percent (N1.56trillion) to N4.14trillion in January 2020 from N2.58trillion in December 2019, representing a YoY increase of 68.96percent (N1.69trillion) from the turnover recorded in January 2019 (N2.45trillion).

Similarly, turnover in Unsecured Placements/Takings increased to N0.15trillion in January 2020, representing 44.07percent (N0.05trillion) and 201.85percent (N0.10trillion) MoM and YoY increases respectively.

Average Over Night (O/N) and Open Buy Back (OBB) rates increased by 313 basis points (bps) and 299bps respectively to close at an average of 6.92percent and 6.08percent in January 2020 from 3.79percent and 3.09percent in December 2019, indicating a decrease in liquidity in the inter-bank market.


Iheanyi Nwachukwu

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