Investors’ trade at I & E FX Window hits $59.75bn in 2018 –Report

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By Kayode Tokede and Oluwafemi Ogunoye

A report by FMDQ OTC securities has disclosed that investors’ turnover trading at the Investors & Exporters (I & E FX) window hits $59.75 billion in 2018.

The specialized foreign exchange window for Investors and Exporters was introduced by the Central Bank of Nigeria (CBN) in April 2017 to boost liquidity in the foreign exchange.

The report obtained by Nigerian NewsDirect during the weekend revealed that total foreign exchange market turnover in December was $11.01billion, representing a 17.22 per cent or $2.29billion decline from $13.30 billion turnover recorded in November.

The report by FMDQ OTC securities noted that turnover at the I&E FX Window recorded an 8.50 per cent or $0.46billion decrease to close at $4.95billion from the $5.41billion recorded in November.

The report attributed the decrease in foreign exchange turnover in December to the 41.96per cent and 2.66 per cent decline in Member-Clients and Inter-Member trades which was only partly offset by the 6.75per cent increase in Member-CBN trades

For last month, the report explained that Naira appreciated against the Dollar at the I&E FX Window, with $/N rate decreasing by 10 kobo to close the month at $/N 364.00 (from $/N364.10 recorded in November), while the CBN Official Spot rate depreciated by $/N0.20 to close at $/N307.00 (from $/N306.80 recorded in November).

“The $/N rate at the Parallel market also appreciated between December and November by N8.00 to close at $/N362.00 from $/N370.00,” the report said.

On fixed income market, the report disclosed that, “Total T Bills and FGN Bonds outstanding recorded a MoM decrease of N1.13trillion an increase of N0.01trillion to close at N12.39trillion and N8.26trn respectively as at December 31, 2018.

“Also, the split in sovereign debt between long and short-term debt as at December was 40:60 (long vs. short term), as against the planned ratio of 75:25 outlined in the Debt Management Strategy (2016 -2019)

“Monthly Trading Intensity in the T bills and FGN Bonds markets decreased from 0.61 and 0.11 in November, to 0.49 and 0.09 in December respectively. YTD trading intensity in both markets stood at 5.32 and 1.50 respectively compared to 6.61 and 1.38 as at the same period in 2017, suggesting more issuances and the growth in outstanding debt may have impacted on trading on some securities in 2018.

“T Bills within the 6-12 months maturity bracket were the most actively traded in December, accounting for 28.33per cent of the total FI market turnover in December.

“Weighted average yields on short, medium and long-term maturities on the sovereign yield curve rose by 0.54ppts, 0.17ppts and 1.10ppts respectively in December.

“Yield spread between the 3-month T. bills and the 10-year FGN Bond decreased by 126 basis points (bps) to close at 1.01per cent in December (2.27per cent in November).”

“The report explained further that turnover in the Fixed Income and Currency (FIC) market for the month ended December 31, 2018 was N17.71trillion, representing an 9.09per cent or N1.77trillion MoM decrease on the turnover of N19.48trillion recorded in November, and a 49.33per cent or N5.85trillion year on year increase.

“Treasury bills (T. bills) and Foreign Exchange (FX) remained the major drivers of turnover in the FIC market, jointly accounting for 76.48per cent of turnover in December and higher by 3.47 percentage points (ppts) from their level of contribution in November (73.01per cent).”

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