BY BAMIDELE FAMOOFO
Turnover in the FMDQ Exchange suffered a setback in November as total value of transactions by investors in the Fixed Income and Currencies market dropped by 8.13% month-on-month in November.
Turnover dropped by N1.4trn to N15.81trn in the month of November as against the value in October, 2021. But year-on-year (YoY), turnover increased by 7.55% or N1.11trn from turnover in November 2020.
Foreign Exchange and Money Market (mainly Repurchase Agreements [Repos]) transactions remained the highest drivers of market turnover, jointly accounting for 52.95% of the total FIC markets turnover in November 2021.
Total FX market turnover in November 2021 was $10.30bn (N4.28trn), representing a MoM decrease of 23.59% ($3.18bn) from the turnover recorded in October 2021 ($13.48bn). The MoM decrease in total FX market turnover was jointly driven by the 21.11% ($1.50bn) and 26.31% ($1.68bn) MoM decrease in FX Spot and FX Derivatives turnover respectively in November 2021.
The MoM decrease in FX Derivatives turnover was driven by MoM decrease in turnover for FX Swaps, FX Futures and Forwards by 19.94% ($0.38bn), 65.28% ($1.17bn) and 4.54% ($0.12bn) respectively. Consequently, the contribution of FX Derivatives to total FX market turnover decreased by 1.70 percentage points (ppts) to 45.64% in November 2021.
In the OTC FX Futures market, the near month contract (NGUS NOV 24, 2021) expired and open positions with a total notional value (NV) of $0.65bn were settled. A far month (60M4) contract, NGUS NOV 25, 2026 was introduced at a Futures price of $/N614.32.
The total NV of open OTC FX Futures contracts as at November 30, 2021 stood at circa $5.45bn representing a MoM decrease of 5.55% ($0.32bn) from its value as at October 29, 2021.
In the FX Market, the Naira appreciated against the US Dollar, gaining 0.04% ($/N0.18) to close at an average of $/N414.92 in November 2021 from $/N415.10 recorded in October 2021. Further, the Naira traded within a range of $/N414.30 – $/N415.10 in November 2021 compared to $/N413.55 – $/N422.07 recorded in October 2021.
In the primary markets, average discount rates for the 91-day and 182- day T.bills6 remained flat at 2.50% and 3.50% respectively, whilst the average discount rate for 364-day T.bills decreased by 0.93ppts, to 6.20% in November 2021 from 7.12% recorded in October 2021. Similarly, the average discount rates for CBN OMO7 bills with comparable tenors remained flat within the range of 7.00% – 10.10% in November 2021.
In November 2021, the coupon rates of re-opened 10Y9 and 20Y Bond issues remained flat whilst the 30Y FGN10 Bond issue increased by 0.10ppts to 13.30%, closing at a range of 11.65% – 13.30% from 11.65%– 13.20% recorded in October 2021.
