The turnover in Nigeria’s Over-The-Counter (OTC) markets for Fixed Income and Currency (FIC) amounted to N12.89trillion in the month of August, a remarkable 11.78percent (or N1.35trillion) increase from the value recorded in July and a 28.48percent (N2.82trillion) increase year-on-year (YoY).
The Treasury Bills (T.bills) segment continued to dominate market share, accounting for 41.01percent (43.66percent in July) while FGN bonds recorded 4.21percent (4.53percent in July) of total turnover in August, according to the OTC Monthly which is produced by the market development group of FMDQ OTC Securities Exchange (FMDQ).
Report on the activities in the Foreign Exchange (FX) market shows it accounted for 31.12percent (22.01percent in July) while Money Market (Repurchase Agreements [Repos]/Buy-Backs & Unsecured Placements/Takings) accounted for 23.42percent (29.71percent in July) of total turnover for the reporting period.
Transactions in the FX market settled at $11.75billion in August, an increase of 52.46percent ($4.04bn) when compared with the value recorded in July ($7.71bn). The Central Bank of Nigeria (CBN) traded a total of $2.20billion through various interventions conducted during the period under review, an 87.51percent ($1.02billion) increase from the figure recorded in July ($1.17billion).
The apex bank also maintained its marginal rate for the Secondary Market Intervention Sales (SMIS) – Wholesale Forwards intervention at $/N325; and $/N357 for Small and Medium-sized Enterprises (SMEs) and Invisibles.
In the month under review, rates for the Naira fluctuated as the Investors’ & Exporters’ (I&E) FX Window witnessed the highest gain closing at $/N359.67 (from $/N366.59) whilst also trading at a premium to the parallel market which closed at $/N366 (from $/N363). The CBN Official Spot rate experienced a slight depreciation, losing N0.25 to close at $/N305.85 from $/N305.60 at the beginning of the month.
Total value traded in the I&E FX Window settled at $3.53billion for August, an increase of 90.34percent ($1.68billion) when compared with the value recorded in July ($1.85billion). So far, the total value traded at the Window since inception stands at $9.28billion, the report noted.
Inter-Member trades stood at $1.42billion in the month of August, a 45.30percent increase when compared with trades recorded in July, and a 165.63percent increase YoY. Member-Client trades stood at $8.14billion in August, an increase of 46.33percent ($2.58billion) from the previous month. Member-CBN trades stood at $2.20billion in August ($1.17billion in July), representing an increase of 87.51percent ($1.02billion) MoM and an increase of 10.31percent ($0.21billion) YoY.
The 14th Naira-settled OTC FX Futures contract, NGUS AUG 16, 2017, worth $488.33million, matured and settled in August, whilst a new 12-month contract – NGUS AUG 29, 2018 – for $1.00billion, was introduced by the CBN at $/N364.
Turnover in the Fixed Income market in the month under review settled at N5.83trillion, a 4.88percent (N0.27trn) increase month-on-month (MoM). Transactions in the T.bills market accounted for 90.67percent of the overall Fixed Income market, from 90.58percent the preceding month. Outstanding T.bills at the end of the month stood at N9.27trillion, an increase of 2.32percent MoM (N9.02trn in July), whilst the FGN bonds’ outstanding value decreased by 0.61percent (N0.04trn) MoM to close at N7.08trn, from N7.12trillion in July.
Trading intensity in the Fixed Income market for the month under review settled at 0.57 and 0.08 for T.bills and FGN bonds respectively, from 0.58 and 0.07 respectively, recorded the previous month. Maturities between one (1) and three (3) months became the most actively traded, accounting for a turnover of N2.49trn in August.
Short-term yields on the sovereign yield curve gained an average of 0.04percent, yields in the medium-term and long-term spectrums remained unchanged at 0.01percent and 0.03percent respectively. The spread between 10-year and 3-month benchmark yields closed positive at 2.78percent points for August (3.20percent in July)
Activities in the Secured Money Market (that is Repos/Buy-Backs) settled at N2.89trillion in August, 11.80percent (N380billion) less than the value recorded in July. On a YoY basis, turnover on Repos/Buy-Backs recorded a 19.04percent (N680billion) decrease. Unsecured Placements/Takings closed the month at a turnover of N120billiion, a 13.22percent (N10billion) decrease MoM and a 67.77percent (N280billion) decrease YoY.
Average NIBOR for the period under review stood at 23.60percent (20.39percent in July), signifying a slight decrease in inter-bank liquidity. The number of executed trades captured on the E-Bond trading system for the month of June amounted to 16,132 as against 17,209 recorded in July. Executed T.bills trade decreased by 11.38percent, while executed FGN bonds trades increased by 42.81percent when compared to the previous month.
Iheanyi Nwachukwu
