FMDQ process N215trn deals in 2020
The estimated total turnover Fixed Income and Currencies (FIC) markets for the full year 2020 stood at N215.08 trillion, indicating a YoY decrease of 7.57 per cent (N17.61trillion) on the turnover of N232.69 trillion recorded in FY 2019
Similarly, turnover in the markets for the month ended December 31, 2020 was N19.89 trillion, representing a month on month (MoM) and year on year (YoY) increase of 35.31 per cent (N5.19 trillion) and 20.91 per cent (N3.44 trillion) respectively.
Foreign exchange (FX) and money market transactions were the highest contributors to the FIC markets in December 2020, jointly accounting for 59.16 per cent of the total FIC market turnover, while OMO Bills and Money Market transactions accounted for majority of turnover in 2020, jointly contributing 50.54 per cent to total turnover.
Total FX market turnover in December 2020 was $19.72 billion (N7.79 trillion), representing a MoM increase of 81.25 per cent ($8.84 billion) from the turnover recorded in November 2020 $10.88 billion (N4.21trillion). This was majorly driven by increased FX intervention sales by the Central Bank of Nigeria (CBN) to dealing member banks to reduce the build-up of unmet Clients’ FX demand in December 2020.
Analysis of the growth in FX market turnover indicates that FX Spot and FX Derivatives turnover increased MoM by 60.00 per cent ($2.55 billion) and 94.87 per cent ($6.29 billion) respectively in December 2020, with 71.15 per cent of the increase in turnover driven by the turnover growth in FX derivatives.
In the OTC FX Futures market, the near month contract (NGUS DEC 30 2020) with a total outstanding notional value (NV) of $2.20 billion matured and was settled, whilst a new long-term (60-month or 60M) contract, NGUS DEC 31 2025 was introduced at a Futures price of $/N608.10, representing 3.24 per cent ($/ N19.07) MoM increase in the futures price, compared to the offer rate ($/N589.03) of the previous 60M contract (NGUS NOV 26 2025).
The total notional value of open OTC FX Futures contracts as at December 31, 2020 stood at $8.09 billion, representing a further decrease of 9.51 per cent ($0.85 billion) from its value as at November 30, 2020 ($8.94 billion), and continuing its downward trend since May 2020.
The average CBN Official Spot $/N exchange rate remained constant at $/N379.00 in December 2020. Conversely, the Naira depreciated against the US Dollar at the Investors’ and Exporters’ (I&E) FX Window, losing 2.07 per cent ($/ N8.01) to close at an average of $/N394.92 in December 2020 from $/N386.91 recorded in November 2020.
Similarly, the Naira depreciated against the US Dollar in the parallel market, losing 0.17 per cent ($/N0.81) to close at an average of $/N476.05 in December 2020 from $/ N475.24 recorded in November 2020.
However the average spread between the exchange rates in the formal (I&E FX Window) and irregulated (parallel) FX markets reduced by 8.15 per cent to $/₦81.13 in December 2020, from $/₦88.33 in November 2020 due to the higher depreciation of the Naira in the I&E FX Window.
Fixed Income (FI) Market (T.bills7 , OMO bills and FGN8 Bonds). In the primary markets, average discount rates for the 91-day, 182-day and 364- day T.bills increased MoM by an average of 0.68 percentage points (ppts), to close at a range of 0.03 per cent – 1.85 per cent in December 2020.
The discount rates for CBN OMO bills decreased MoM by an average of 1.01ppts to close at a range of 1.78 per cent – 6.07 per cent in December 2020.
Similarly, the coupon rates of the 15Y and 25Y FGN Bond issuances increased by an average of 1.58ppts to close at a range of 6.95 per cent – 7.00 per cent in December 2020.