FMDQ OTC: Forex turnover hits N6.56trn in one month

The total Foreign Exchange (FX) market turnover in September 2019 was put at N6.56trillion ($18.12bn), representing a 29.47per cent or $7.57billion Month-on-Month (MoM) decrease from August 2019, latest data from FMDQ OTC Securities Exchange revealed.

The report by FMDQ OTC noted that the FX market turnover by trade type indicates MoM decrease across all categories, with Member-CBN trades recording the highest percentage MoM decrease at 47.61per cent or $3.32billion, while Member-Client trades recorded the highest MoM decrease in the dollar (nominal) terms, at $4.12billion or 26.77per cent.

Analysis by-product type indicates that the MoM decrease in FX turnover was mainly driven by a 21.20per cent or $3.04billion and 39.90per cent or $4.53billion MoM decrease in FX Spot and FX Derivatives turnover respectively.

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The report noted that, in September 2019, the Naira-settled OTC FX Futures Contract (NGUS SEP 18 2019) with a total open contract value of $1.29billion matured and was settled, and a new contract, NGUS OCT 28 2020 for $1.00billion at $/N365.50 was introduced.

“This brings the total value of open OTC FX Futures Contracts to $10.24billion, while the total value of contracts settled since inception to date at c.$19.58billion.

“In September 2019, the CBN Official Spot rate for $/N remained constant at $/N307.00.

“Similarly, the parallel market rate remained constant at $/N360.00, while the Naira appreciated against the US Dollar at the Investors’ and Exporters’ (I&E) FX Window by $/N0.70 to close at $/N362.23 in September 2019,” the report explained.

According to the latest report from FMDQ OTC, the turnover in the Fixed Income and currency markets for the month ended September 30, 2019, was N19.20trillion, representing a MoM decrease of 17.28 per cent (N4.01trillion) on the turnover recorded in August 2019 (N23.21trillon) and a YoY increase of 15.32per cent (N2.55trillion) on the turnover recorded in September 2018 (N16.65trillion).

“Treasury bills and FX product segments persisted as the major drivers of turnover, jointly accounting for 78.42 per cent of the total FIC market turnover in September 2019 and representing a MoM decrease of 0.91 per cent in the joint contribution recorded in August 2019 (79.33%), driven by an increase in the contribution of Repurchase Agreements/Buy-Backs and Unsecured Placements/Takings to 15.05per cent and 1.45 per cent respectively.

“In September 2019, total OMO bills issued was N15.22trillion, representing a MoM increase of 0.53per cent (N0.08trillion), whilst average T-Bills outstanding remained constant at N2.58trillion.

“Furthermore, average outstanding FGN bonds recorded a MoM increase of 0.68per cent (N0.06trillion) to close at N8.83trillon in September 2019 from N8.77trillion reported in August 2019

“Trading intensity for T-Bills decreased to 0.48 in September 2019 from 0.51 recorded in August 2019, similarly, trading intensity for FGN bonds decreased from 0.14 in August 2019 to 0.11 in September 2019.

“YTD Trading intensity for T-Bills and FGN bonds stood at 4.09 and 1.22 respectively compared to 3.99 and 1.20 recorded in the corresponding period in 2018.

“In September 2019, T-Bills within the 3M – 6M maturity bracket remained the most actively traded among the short-term securities (i.e. 1M – 2Y) accounting for 35.44per cent of the total Fixed Income market turnover, while FGN bonds within the 15Y – 20Y maturity bracket were the most actively traded among the medium to long-term securities, accounting for 4.60% of the total Fixed Income market turnover.

“Weighted average yields on the short and long-term Fixed Income maturities decreased by 0.25per cent and 0.09per cent respectively in September 2019. This can be attributed to the normalisation of activities in the fixed income market, relative to August 2019 where a significant increase in FPI outflows was reported.

“Conversely, the weighted average yield on medium-term maturities increased by 0.10per cent. However, inflation-adjusted yield remained positive across all tenors in the period under review.”