Spot FX market revenue increased month over month (MoM) by 25.40% ($1.11 billion) from the revenue recorded in August 2023 ($4.37 billion) to $5.48 billion (N4.15 trillion) in September 2023.
The FMDQ Markets Monthly Report for May included information on this.
According to the report, the US Dollar lost value versus the Naira on the foreign exchange market, with the spot exchange rate ($/N) falling by 0.79% ($/N6.02) to average $/N757.02 in September 2023 from $/N763.04 in August 2023.
“Further, exchange rate volatility increased in September 2023 as the Naira traded within an exchange rate range of $/N722.39-$/N780.00 compared to $/N738.18-$/N789.08 recorded in August 2023,” the statement continued.
Market for Spot Fixed Income
The report states that the market revenue for FI was N9.23 trillion in September 2023, up 29.67% (N2.11 trillion) month over month from the turnover of N7.12 trillion in August 2023.
The MoM increase in the FI market revenue, according to FMDQ, was driven by increases in revenue of 25.74% (N0.47 trillion), 23.33% (N0.56 trillion), 23.95% (N0.33 trillion), and 50.08% (N0.76 trillion) for Treasury Bills, OMO Bills, CBN Special Bills, and FGN Bonds, respectively, offsetting a decline of 9.63% (N0.003 trillion) MoM in Other Bond transactions.
“The trading intensity (TI) for T-Bills and FGN Bonds grew MoM by 0.09 and 0.04 to 0.48 and 0.12, respectively.
The most actively traded sovereign FI securities in the spot market were T-bills and FGN Bonds with tenors of >6M – 12M and >20Y, respectively. These securities accounted for 39.08% (N1.78 trillion) and 22.28% (N1.02 trillion) of the secondary market revenue for sovereign FI securities.
The yield differential between the 3M and 30Y sovereign FI securities increased by 0.51 percentage points to 11.14 percentage points in September 2023, reflecting a steepening of the sovereign yield curve.
In September 2023, real (inflation-adjusted) yields were negative across the yield curve and continued to fall as a result of rising inflation that was outpacing increases in nominal yields and was still greater than policy interest rates.” according to the report.
Money Market: The study states that in September 2023, overall revenue in the MM segment rose MoM by 30.67% (N1.87 trillion), or N7.95 trillion.
“The Repos/Buy-backs and Unsecured Placement/Takings transactions saw increases of 27.48% (N1.63 trillion) and 147.15% (N0.24 trillion), respectively, driving the MoM growth”.
In September 2023, the average O/N rate and OPR rate (secured lending rate) closed at an average of 11.12% and 10.40%, respectively, according to the report.
Market for FX Derivatives
FMDQ said that in September 2023, total revenue in the FX derivatives market segment was $2.55 billion (N1.94 trillion), an increase of 71.61% ($1.07 billion) month over month.
The increase in transactions across FX Swaps, FX Forwards, and FX Futures, respectively, by 54.67% ($0.76 billion), 135.10% ($0.14 billion), and $0.17 billion, was cited as the main driver of the MoM increase in the FX derivatives revenue.
The near-month contract (NGUS SEP 27, 2023) expired in the Cleared Naira-Settled Non-Deliverable Forwards market, and open positions with a total notional value (NV) of $0.65 billion were settled.
In the Cleared Naira Settled Non-Deliverable Forwards market, there were no new far-month (60M) contracts introduced during the review period.
As a result, as of September 29, 2023, the total net value (NV) of open Cleared Naira-Settled Non-Deliverable Forwards contracts declined for the third consecutive month to approximately $4.91 billion.
This compares to its valuation as of August 31, 2023 and September 30, 2022, respectively, and reflects a MoM reduction of 11.69% ($0.65 billion) and a YoY increase of 17.46% ($0.73 billion), the report added.