Unlike the fluctuations in the equities market, the Fixed Income and Currency market has maintained a stable outlook as investors enjoy the benefits of the tightening measures of the Central Bank of Nigeria through increment in interest rates.
The Monetary Policy Committee of the CBN has consistently hiked lending rates to contain inflation in the last few months.
Nigeria’s current Monetary Policy Rate otherwise known as the lending rate was increased to 26.25 percent at the last MPC meeting while inflation stands at 33.95 percent.
The ‘FIC’ in May 2024 recorded growth both on month on month-on-month and year-on-year basis, according to data released by the FMDQ Exchange.
In May 2024, the total secondary market turnover on FMDQ Exchange was ₦41.69 trillion, representing an MoM increase of 51.62 percent (₦14.19trn) and a YoY increase of 164.26 percent (25.92trn) from April 2024 and May 2023 figures, respectively.
Foreign Exchange (FX) and Money Market (MM) transactions dominated secondary market activity, jointly accounting for 73.37 percent of the total secondary market turnover in May 2024.
Activities in the Sovereign market DMO sold T.bills valued at ₦913.64 billion across its auctions in May 2024, representing a 30.48 percent (₦400.63bn) MoM decrease on the value of T-bills sold across its auctions in April 2024 (₦1,314.28bn).
Similarly, the DMO sold FGN Bonds worth ₦682.07 billion (inclusive of ₦301.30bn non-competitive bids) in May 2024.
This represented a 8.82 percent (₦55.26bn) MoM increase on the amount sold in April 2024 (₦626.81bn).
The ratio of total value of sovereign securities sold by the DMO relative to the amount offered1 across its auctions in April 2024 was 132.73 percent and 151.57 percent, for T.bills and FGN Bonds, respectively, indicating sustained demand for sovereign securities.
In May 2024, the CBN sold OMO Bills worth ₦538.29 billion in the primary market, representing an MoM 20.45 percent (₦138.36bn) decrease on the amount sold in April 2024 (₦676.65bn).
The total value of Non-Sovereign Bonds listed on the FMDQ Exchange in May 2024 was ₦1.15 billion, compared to the previous month which witnessed no listings. However, Corporate Bonds worth ₦3.64 billion matured and were redeemed resulting in a 0.11 percent (₦2.49bn) decrease in the total outstanding value of Non-Sovereign Bonds to ₦2,192.02 billion in May 2024.
The total value of CPs quoted on the FMDQ Exchange in May 2024 was ₦258.19bn, representing an MoM increase of 309.39 percent (₦195.12bn) from the value of CPs quoted in April 2024 (₦63.07bn).
Most of the quoted CPs were issued by institutions from the Manufacturing sector (16), followed by the Financial Services (3) and Real Estate Sectors (3), whilst Others emanated from the Health (2), Agriculture (2), Hospitality (1), and Free Trade Zone (1).
As a result, the outstanding value for CPs increased MoM by 16.97 percent (₦134.33bn) to ₦926.32 billion in May 2024 offsetting the impact of the ₦123.22 billion worth of CPs that matured during the review period.
Total spot market turnover for all products traded in the secondary market in May 2024 was ₦40.01 trillion, representing a MoM increase of 53.53 percent (₦13.95trn) from April 2024 figures.
The MoM increase in total spot market turnover was driven by the increase in turnover across all spot market product categories, as FX, FI and MM turnover increased MoM by 46.91 percent (₦5.22trn), 33.36 percent (₦2.78trn) and 90.15% (₦5.95trn), respectively.
The increase in MM turnover was driven by the MoM increase in Repos/Buy-backs and Unsecured Placement/Takings transactions.
Similarly, the uptick in FI turnover was driven by the increase in FGN Bonds and OMO Bills, offsetting the decrease in T.bills, CBN Special bills and Other Bonds.
Spot FX market turnover was $11.42 billion (₦16.36trn) in May 2024, representing a 25.23 percent ($2.30bn) MoM increase from the turnover recorded in April 2024 ($9.12bn).
In the FX Market, the Naira depreciated against the US Dollar, with the spot exchange rate ($/₦) increasing by 13.32 percent ($/₦191.21) to close at an average of $/₦1,435.87 in May 2024 from $/₦1,244.66 recorded in April 2024.
Further, exchange rate volatility increased in May 2024 as the Naira traded within an exchange rate range of $/₦1,173.88 – $/₦1,533.99 compared to $/₦1,072.74 – $/₦1,419.11 recorded in April 2024.
Fixed Income market turnover in May 2024 was ₦11.10 trillion, representing a MoM increase of 33.36 percent (₦2.78trn) from the turnover recorded in April 2024 (₦8.33trn).
The MoM increase in turnover was driven by the 189.03 percent (₦3.20trn) and 21.31 percent (₦0.40trn) increase in OMO Bills and FGN Bonds, offsetting the 14.64 percent (₦0.67trn), 99.98 percent (₦0.14trn), and 28.50% (₦0.01trn) decrease in turnover across T.Bills, CBN Special Bills, and Other Bonds transactions, respectively.