Forex market turnover declined by 32.97% to $7.62bn in one month- FMDQ

FMDQ Securities Exchange has disclosed that

A total foreign exchange market turnover in May has declined by a 32.92 per cent or $3.74billion Month-on-Month (MoM) to $7.62billion or N2.94trillion, as against $11.36billion or N4.38 trillion turnovers recorded in April.

FMDQ in a report disclosed that the decline showed a continuing downward trend in foreign exchange turnover since April 2020, albeit at a slower rate than the MoM decrease recorded in April 2020 (60.72 per cent; $17.57billion).

The report stated that “Analysis of foreign exchange market turnover indicated a general decrease in foreign exchange market activity by trade type, with Member-Client trades accounting for 55.61 per cent ($2.08billion) of the total MoM decrease in foreign exchange turnover, while foreign exchange Derivatives accounted for 89.30 per cent ($3.34billion) of the total MoM decrease in foreign exchange turnover by product type in May 2020.

“However, it is noteworthy to mention that the turnover for Member-CBN foreign exchange Spot trades increased by 100 per cent MoM from $0.16billion in April 2020 to $0.32billion in May 2020. “

According to the report, turnover in the Fixed Income and Currency (FIC) markets for the month ended May 29, 2020, was N11.78trillon, indicating a MoM decrease of 29.46per cent (N4.92trillion) from N16.70trillion turnover recorded in April, and a YoY decrease of 42.51per cent (N8.71trillion) from the turnover recorded in May 2019 (N 20.49trillion).

“The turnover recorded in the FIC markets in May 2020 represents the lowest turnover recorded since January 2018 (N 11.71trillion)

“However, YTD turnover increased to N100.80trillion representing a YoY increase of 0.70 per cent (N0.70trillion) on the YTD turnover of N100.10trillion recorded in May 2019,” the report disclosed.

According to the report, Money Market i.e. Repurchase Agreements (Repos) & Unsecured Placements transactions and OMO bills jointly accounted for 61.26 per cent of the total FIC market turnover recorded in May 2020, as Money Market transactions (mainly Repos) replaced foreign exchange  as the highest contributor to FIC markets turnover in May 2020, compared to April 2020.

The lastest report disclosed that “In the OTC FX Futures market, the near month contract (NGUS MAY 27 2020) with a total outstanding notional value of $2.51billion expired and was settled, whilst a new far month (60-month) contract, NGUS MAY 28 2025 was introduced at a contract rate of $/ N584.11.

“The total notional value of open OTC FX Futures contracts as at May 29, 2020, stood at c.$13.94billion, representing a 7.07 per cent ($1.06billion) decrease on the value of open contracts as at April 30, 2020 (c.$15.00billion), while the total the notional value of OTC FX Futures contracts traded since inception stood at $46.80billion as at May 29, 2020.”

At the foreign exchange market, the report stated that, “The average CBN Official Spot US$/ N exchange rate remained flat at $/ N361.00 in May 2020 compared to the average rate recorded in April 2020, while the Naira depreciated against the Dollar at the Investors’ and Exporters’ (I&E) FX Window, losing $/ N1.18 (average of $/ N 384.99 in April 2020) to close at an average of $/ N 386.17 in May 2020.

“In the parallel market, the Naira depreciated against the US Dollar losing $/ N22.37 (average of $/N426.35 in April 2020) to close at an average of $/ N450.00 in May 2020 Fixed Income (FI) Market (T.bills, OMO bills and FGN7 Bonds) “

However, in the primary market, average discount rates on the 91-day T.bill increased by 49 basis points to 2.48 per cent in May 2020, representing the first time discount rates have increased since October 2019 when the CBN effectively bifurcated the bills (T.bills and OMO bills) segment of the FI market.

“However, the average discount rates on the 182-day and 364-day T.bills declined further by 2bps and 12bps to 2.79 per cent and 3.93per cent respectively in May 2020, while there were no new OMO bills issuances in May 2020

“The coupon rates for newly issued 5-year and 30-year FGN Bonds increased by 20 basis points and 10 basis points to 9.20per cent and 12.60 per cent respectively in May 2020, compared to the coupon rates for issuances in April 2020. Conversely, the coupon rate on the 15-year FGN Bond decreased by 30basis points to 11.70 per cent in May 2020

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“As at May 29, 2020, the total value of T.bills and FGN Bonds outstanding was ₦2.76trillion and N10.03trillion, representing MoM increases of 4.15 per cent (N0.11trillion) and 4.05 per cent (N0.39trillion) respectively, while the total value of OMO bills outstanding was N9.52trillion representing a MoM decrease of 4.23 per cent (N 0.42trillion) from ₦9.94trillion as at April 30, 2020.”