Turnover in Fixed Income and Currency (FIC) markets for the month ended September 30, 2020 was N14.07 trillion, indicating a month-on-month (MoM) and year-on-year (YoY) decrease of 1.33 per cent (N0.19 trillion) and 26.76 per cent (N5.14 trillion) from N14.26 trillion (August 2020) and N19.21trillion (September 2019) respectively. The YTD turnover as at September 30, 2020 was N164.32 trillion, representing a YoY decrease of 7.69 per cent (N13.68 trillion) on the YTD turnover of N178.00 trillion recorded as at September 30, 2019. According a report obtained from FMDQ by New Telegraph, OMO bills and foreign exchange transactions were the highest contributors to the FIC markets in September 2020, jointly accounting for 54.48 per cent of the total FIC market turnover.
Total FX market turnover in September 2020 was $8.66 billion (N3.34 trillion), representing a MoM decrease of 11.27 per cent ($1.10 billion) from the turnover recorded in August 2020 $9.76 billion (N3.76 trillion) as liquidity challenges in the FX market persisted, despite the interventions by the Central Bank of Nigeria (CBN) in form of FX Sales to Dealing Member (Banks) to reduce the backlog of unmet FX demand in September 2020. Analysis of FX market turnover indicates that FX Derivatives turnover decreased MoM by 28.94 per cent ($2.04 billion) whilst FX Spot turnover increased by 34.69 per cent ($0.94 billion) in September 2020.
In the OTC FX Futures market, the near month contract (NGUS SEP 30 2020) with a total outstanding notional value of $1.54 billion matured and was settled, whilst a new long-term (60-month) contract, NGUS SEP 24 2025 was introduced at a rate of $/N589.09. The total notional value (NV) of open OTC FX Futures contracts as at September 30, 2020 stood at $11.13 billion, representing a 9.81 per cent ($1.21 billion) decrease on the NV of open contracts as at August 31, 2020 ($12.34 billion), and continuing the downward trend in the NV of open contracts since May 2020.
The total NV of OTC FX Futures contracts traded since inception stood at $50.41 billion as at September 30, 2020. The CBN Official Spot $/N exchange rate closed at an average of $/N379.04 in September 2020, representing a 0.37 per cent ($/N1.39) appreciation of the exchange rate from $/N380.43 recorded in August 2020. At the Investors’ and Exporters’ (I&E) FX Window, the Naira appreciated against the US Dollar, gaining 0.06 per cent ($/N0.25) to close at an average of $/N386.01 in September 2020 from $/N386.26 recorded in August 2020.
Similarly, in the parallel market, the naira appreciated against the US dollar gaining 3.90 per cent ($/N18.55) to close at an average of $/N456.74 in September 2020 from $/N475.29 recorded in August 2020.
This can be attributed to the resumption of FX intervention sales by the CBN to Bureau de Change operators in September 2020. Consequently, the average spread between the exchange rate in the I&E FX Window and the parallel market reduced by 20.55 per cent ($/N18.30) to $/N70.73 in September 2020 from $/N89.03 in August 2020 Fixed Income (FI) Market (T.bills7), OMO bills and FGN8 Bonds).
In the primary market, average discount rates for the 91-day and 182-day T.bills both decreased MoM by eight basis points (bps) to 1.09 per cent and 1.51 per cent respectively in September 2020, whilst the average discount rates for the 364-day T.bill decreased MoM by 30bps to 2.97 per cent in September 2020. Similarly, the discount rates for OMO bills decreased MoM by an average of 3bps to close at a range of 4.86 per cent – 8.92 per cent in September 2020.
In the primary market for sovereign bonds, the marginal rates for FGN Bonds decreased by an average of 84bps to close at a range of 6.00 per cent – 8.94 per cent respectively in September 2020.