Bamidele Famoofo 
…as turnover hits N145trn in 9months
Investors in the Fixed Income and Currencies (FIC) markets grabbed foreign exchange worth $119.54billion or N41.5trillion in nine months on the trading platform of the FMDQ Exchange. Turnover in the FX segment accounted for 28.5 percent of total turnover in the FIC markets in the nine months period ended September 30, 2021. Total market turnover in the markets stood at N145.38trillion in the review period. The latest figures released by the FMDQ on the activities of investors in the FIC markets showed that turnover in September rose to N24.03trillion, representing 94.89 percent increase compared to N11.70trillion in August. Turnover in September accounted for about 17 percent of aggregate market turnover in nine months. The turnover recorded in September 2021 also represents a Year on Year (y/y) growth of 70.8 percent or N9.96trillion as against the turnover in September 2020.
Month-on-Month review
Turnover in the FIC markets in August 2021 was N12.33trn, representing a 27.34 percent (N4.64trn) MoM decrease from turnover in July 2021, and a 13.53 percent (N1.93trn) YoY2 decrease from August 2020 turnover figure. Foreign Exchange (FX) and Money Market transactions remained the highest drivers of turnover, jointly accounting for 67.44 percent of the total FIC markets turnover in August 2021 Total FX market turnover in August 2021 was $9.13bn (N3.76trn), representing a MoM decrease of 26.96 percent ($3.37bn) from the turnover recorded in July 2021 ($12.50bn). In July, turnover stood at N16.97trn, representing a 10.84 percent (N1.66trn) MoM1 increase and a 9.35 percent (N1.75trn) YoY decrease from June 2021 and July 2020 turnover figures, respectively.
Foreign Exchange (FX) and Money Market transactions were the highest contributors to the FIC markets turnover in July 2021, jointly accounting for 64.87 percent of the total FIC markets turnover. Total FX market turnover in July 2021 was $12.50bn (N5.14trn), representing a MoM increase of 23.52 percent ($2.38bn) from the turnover recorded in June 2021 ($10.12bn).
Investors injected N15.31trn into the markets in the month of June, representing a MoM increase of 49.51 percent (N5.07trn) and a YoY2 decrease of 7.04 percent (N1.16trn). Foreign Exchange (FX) and Money Market transactions were the highest contributors to the FIC markets turnover in June 2021, jointly accounting for 64.18 percent of the total FIC markets turnover. Total FX market turnover in June 2021 was $10.12bn (N4.16trn), representing a MoM increase of 38.44 percent ($2.81bn) from the turnover recorded in May 2021 ($7.31bn). Turnover for May was N10.24trn, representing a MoM and YoY decrease of 36.71 percent (N5.94trn) and 13.07 percent (N1.54trn) respectively.
Foreign Exchange (FX) and Money Market transactions were the highest contributors to the FIC markets turnover in May 2021, jointly accounting for 63.13 percent of the total FIC markets turnover. Total FX market turnover in May 2021 was $7.31bn (N3.63trn), representing a MoM decrease of 41.24 percent ($5.13bn) from the turnover recorded in April 2021 ($12.44bn).
Turnover in the FIC markets for the month ended April 30, 2021 was N16.18trn, representing a MoM and YoY decrease of 17.24 percent (N3.37trn) and 3.11 percent (N0.52trn) respectively. Foreign Exchange (FX) and Money Market transactions were the highest contributors to the FIC markets in April 2021, jointly accounting for 54.57 percent of the total FIC markets turnover. Total FX market turnover in April 2021 was $12.44bn (N5.11trn), representing a MoM increase of 0.73 percent ($0.09bn) from the turnover recorded in March 2021 ($12.35bn).
Turnover in March was N19.55trn, representing a MoM increase of 10.20 percent (N1.81trn) and a YoY decrease of 32.54 percent (N9.43trn). Foreign Exchange (FX) and OMO bills transactions were the highest contributors to the FIC markets in March 2021, jointly accounting for 56.52 percent of the total FIC markets turnover. Total FX market turnover in March 2021 was $12.35bn (N5.07trn), representing a MoM increase of 16.51percent ($1.75bn) from the turnover recorded in the previous month ($10.60bn). Turnover in the FIC markets for the month ended February 26, 2021 was N17.74trn, representing a MoM increase of 36.15 percent (N4.71trn) and a YoY decrease of 24.41 percent (N5.73trn). Foreign Exchange (FX) and OMO bills transactions were the highest contributors to the FIC markets in February 2021, jointly accounting for 61.15 percent of the total FIC markets turnover.
Total FX market turnover in February 2021 was $10.60bn (N4.29trn), representing a MoM increase of 27.86 percent ($2.31bn) from the turnover recorded in the previous month4 ($8.29bn). For the month ended January, 2021, turnover was N13.03trn, representing a MoM and YoY decrease of 34.49 percent (N6.86trn) and 43.81 percent (N10.16trn) respectively. Foreign Exchange (FX) and OMO bills transactions were the highest contributors to the FIC markets in January 2021, jointly accounting for 55.42 percent of the total FIC market turnover.
Total FX market turnover in January 2021 was $8.29bn (N3.26trn), representing a significant MoM decrease of 57.96 percent ($11.43bn) from the turnover recorded in December 2020 ($19.72bn), attributable to the reduced interventions by the CBN in the FX market as well as decline in foreign portfolio investment net flows in the review period
September Update
Turnover in the FIC markets in September 2021 was N24.03trillion, representing a significant increase of 94.89 percent (N11.70trn) month on month (MoM) and 70.79 percent (N9.96trn) year on year (YoY) from turnover in August 2021 and September 2020 respectively. Foreign Exchange (FX) and Money Market transactions remained the highest drivers of turnover, jointly accounting for 54.22 percent of the total FIC markets turnover in September 2021. Notably, Open Market Operation (OMO) and CBN Special Bills’ contribution to FIC Market turnover increased by 12.52 percentage points (“ppts”) to 23.96 percent.
Total FX market turnover in September 2021 was $17.08billion (N7.05trn), representing a MoM increase of 87.08 percent ($7.95bn) from the turnover recorded in August 2021 ($9.13bn). The month on month increase in total FX market turnover was jointly driven by the 68.61 percent ($3.33bn) and 108.02 percent ($4.62bn) MoM increase in FX Spot and FX Derivatives turnover respectively in September 2021. The MoM increase in FX Derivatives turnover was driven by MoM increase in turnover across all product types which include FX Swaps which grew by 34.32 percent, FX Forwards, 54.75 percent; FX Futures recorded a significant growth of 840.07 percent while Other Derivatives jumped by 128.88 percent.
Consequently, the contribution of FX Derivatives to total FX market turnover increased by 5.25 percentage points to 52.12 percent in September 2021. In the OTC FX Futures market, the near month contract3 (NGUS SEP 29, 2021) expired and open positions with a total notional value (NV) of $0.34billion were settled while a far month (60M4) contract, NGUS SEP 30, 2026 was introduced at a Futures price of $/N614.32.
The total NV of open OTC FX Futures contracts as at September 30, 2021 stood at circa $4.92billion representing a MoM increase of 27.46 percent ($1.06bn) from its value as at August 31, 2021. In the FX Market, the Naira depreciated against the US Dollar, losing 0.31 percent ($/N1.26) to close at an average of $/N412.75 in September 2021 from $/N411.49 recorded in August 2021. Further, the Naira traded within a range of $/N410.67 – $/ N414.90 in September 2021 compared to $/N410.80 – $/N412.00 recorded in August 2021.
In the primary markets, average discount rates for the 91-day and 182-day T.bills remained flat at 2.50 percent and 3.50 percent respectively, whilst the average discount rate for 364-day T.bills increased by 0.22 ppts, to 7.30 percent in September 2021 from 7.08 percent recorded in August 2021. Similarly, the average discount rates for CBN OMO7 bills for comparable tenors 8 remained flat at a range of 7.00 percent to 10.10 percent in September 2021.
