Forex investors trade N1.13trn in 2 weeks

…5 banks rake N362bn from investments in 6 months
…CBN injects $ 615m, CNY46.58m in 1 week, reserves now $45.468bn
Investors and Exporters (I&E) FX window between Monday, August 27 and Friday, September 7, 2018, recorded total transactions turnover of N1.129 trillion ($3.138 billion), findings by The Daily Times revealed.

This is just as five of the commercial banks operating in the country generated N362 billion from securities investment in first half year ended June 30, 2018 (H1).

Our further checks showed that figure traded in the investors forex window from Monday 27, 2018 to Friday 31, August, 2018, stood at N540billion ($1.5billion) during the first week of period considered, before adding a whopping traded value of N589 billion ($1.638billion) in the just concluded week.

The breakdown of the figure showed that Monday, August 27 recorded transactions value of $601.64 million, which was the highest traded during the week under review, but dropped significantly the following day and the mid week with closing turnover of $170.37 million respectively, before weakening further on Thursday, August 30, with $131.82 million, however, ended the month on Friday, August 31, 2018 with $425.98 million.

The special FX window, on the first trading day on Monday, September 3, recorded a stabled transactions value of $425.98 million, the same figure traded on the last trading day in August. But it weakened on Tuesday, September 4, 2018 to $146.49 million.

It however rebounded to $408.08 on Wednesday and Thursday, but relapsed on the last trading of the just concluded week with $249.84million.

During the week under review, The Daily Times notes that the Central Bank of Nigeria (CBN) injected total sum of $615 million into the interbank retail Secondary Market Intervention Sales.

The apex bank on Tuesday, September 4, 2018 made available the sum of $210 million to the Foreign Exchange market to strengthen the naira, so as to meet customers’ requests in various segments of the forex market.

The CBN, in its quest to meet customers’ needs in the various segments of the market, offered $100 million to authorised dealers in the wholesale segment of the market, while the Small and Medium Enterprises (SMEs) segment got boosted with the sum of $55 million.

According to figures obtained from the CBN, customers requesting foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others, were also allocated the sum of $55 million.

On Friday, September 7, 2018, the apex bank also injected the sum of $303.91 million into the interbank retail Secondary Market Intervention Sales.

This is in addition to the sale of CNY 46.58 million in the spot and short-tenored forwards.

The figures obtained from the CBN over the weekend showed that the US dollar-denominated interventions were only for concerns in the agricultural and raw materials sectors.

Mr. Isaac Okorafor, the Director, Corporate Communications at the CBN, said that the exercise which was in tune with the CBN guidelines, were for the payment of Renminbi denominated Letters of Credit for agriculture as well as raw materials.

Okorafor added that the sales in the Chinese Yuan were through a combination of spot and short-tenored forwards, arising from bids received from authorized dealers.

He noted that availability of Renminbi was sure to ease pressure on the Nigerian foreign exchange market.

The CBN spokesman attributed the relative stability in the foreign exchange market to the intervention of the CBN as well as the sustained increase in crude oil prices in the international market.

However, latest figure of the external reserves monitored by the CBN, as at Thursday, September 6, 2018, stood steady at $45.468 billion.

Meanwhile, five of the commercial banks operating in the country generated N362 billion from securities investment in first half year ended June 30, 2018 (H1).

The banks considered had generated N3324.9 billion on securities investment in prior half year of 2017 as yield on Treasury Bills was attractive, as high as 18 per cent.

Banks also invest in Federal Government Bonds.

The five banks considered are Guaranty Trust Bank Plc, Access Bank Plc, Zenith Bank Plc, Stanbic IBTC Holdings Plc and United Bank for Africa (UBA) Plc.

As UBA reported significant increase on interest income generated from Investment securities, the likes of Zenith Bank and FBN Holdings reported decline in the period under review.

The breakdown revealed that UBA’s interest income on securities rose by 51.6 per cent to N81.24 billion in H1 2018 from N53.6 billion reported in H1 2017.

UBA reported N43.7 billion interest incomes on investment securities in H1 v2018 as against N30.03 billion in H1 2017 while interest income on bonds hit N37.5billion from N23.5 billion reported in H1 2017.

For Access Bank, the lender investment in securities rose by 20.7per cent to N45.27 billion in H1 2018 compared with N37.49 billion in H1 2017, while FBN Holdings reported FBN Holdings 2.4 per cent drop on interest income generated on government securities to N79.66 billion from N81.6 billion in H1 2017.

Zenith Bank thus reported five per cent drop on securities investment to N77.29 billion in H1 2018 from N81.37 billion in H1 2017, attributable to 13 per cent drop in T bills investment to N51.4 billion in H1 2018 as against N59 billion reported in H1 2017.

The other two banks, GTBank and Stanbic IBTC Holdings reported 17.8 per cent and 0.13 per cent increase on interest income generated from Investment securities to N51.1 billion and N27.5 billion in H1 2018 respectively.

The Central Bank of Nigeria (CBN) last year issued T-Bills twice a month to help the Federal Government fund its budget deficit, support commercial lenders in managing liquidity and curb inflation rate.

Analysts at InvestmentOne Securities said: “The looser monetary stance and its potential impact on yields on assets, dampened investors’ sentiment towards lenders.

“Yields on one-year treasury bills are currently witnessing the effect of the recovery in economic activities and the administration’s refinancing efforts, averaging 13.57 per cent in H1 2018 as against 22.14per cent in H1 2017.”

The Lagos based firm in its latest ‘Banking Sector H1 2018 Review and Outlook: Still in Focus – Cost of Risk’ report, said, “The negative impact on asset yields have also been revealed in H1 2018 financial results released during the period.

“During the period, there was a slight moderation in average net interest margin (7.31 per cent in H1 ’18 as against 7.85per cent in financial year of 2017). This was majorly due to a slight increase in average cost of funds especially borrowed funds and a drop in yields on earning assets in the declining yield environment,” it added.