Total FX market turnover grows by 23.52% to N5.14trn in July
By Kayode Tokede
FMDQ Exchange has disclosed that total Foreign Exchange (FX) market turnover in July 2021 was N5.14trillion or $12.50billion, representing a Month-on-Month (MoM) increase of 23.52 per cent or $2.38billion from $10.12billion turnover recorded in June 2021.
The latest report by FMDQ noted that the MoM increase in total FX market turnover was jointly driven by the 29.23 per cent or $1.44billion and 18.20 per cent or $0.94billion MoM increase in FX Spot and FX Derivatives turnover respectively in July 2021
According to the report, the MoM increase in FX Derivatives turnover was driven by MoM increase in turnover for FX Swaps, FX Forwards and Other Derivatives by 31.03 per cent ($0.61billion), 19.24 per cent ($0.30billion) and 57.65 per cent ($0.42billion) respectively.
“However, FX Futures decreased by 40.72 per cent ($0.38billion), resulting in the lower MoM increase in FX Derivatives turnover relative to the MoM increase in FX Spot turnover.
“Consequently, the contribution mix of FX Spot and FX Derivatives to total FX market turnover changed to 50.95 per cent and 49.05 per cent, respectively.”
The report also disclosed that turnover in the Fixed Income and Currencies (FIC) markets in July 2021 was N16.97trillion, representing a 10.84 per cent or N1.66trillion) MoM increase and a 9.35 per cent or N1.75trillion) YoY decrease from June 2021 and July 2020 turnover figures, respectively.
The report noted that FX and Money Market transactions were the highest contributors to the FIC markets turnover in July 2021, jointly accounting for 64.87 per cent of the total FIC markets turnover.
In the OTC FX Futures market, the near month contract (NGUS JUL 28, 2021) with a total outstanding notional value (NV) of $0.24billion matured and was settled, whilst a new long-term (60M4 ) contract, NGUSJUL 29, 2026 was introduced at a Futures price of $/N614.32
“The total NV of open OTC FX Futures contracts as at July 30, 2021 stood at circa $4.22billion representing a MoM decrease of 0.71 per cent or $0.03billion from its value as at June 30, 2021,” the report said.
At the Investors & Exporters Foreign Exchange (I&E FX) Window, the report by FMDQ said Naira depreciated against the Dollar, losing 0.02 per cent ($/N0.08) to close at an average of $/N411.38 in July 2021 from $/N411.30 recorded in June 2021 whilst trading within a range of $/N410.38 – $/N411.75 in July 2021
According to the report, “Similarly, the Naira depreciated against the Dollar in the parallel market, losing 1.16% ($/N5.83) to close at an average of $/N506.40 in July 2021, and trading within a range of $/N503.00 – $/N525.00.
“Consequently, the average spread between the exchange rates in the formal (I&E FX Window) and unregulated (parallel) FX markets increased by $/N5.75 to $/N95.02 in July 2021.”
The report added further that “In the primary markets, average discount rates for the 91-day and 182- day T.bills remained flat at 2.50 per cent and 3.50 per cent respectively, whilst the average discount rate for 364-day T.bills declined by 0.96 percentage points (ppts), to 8.44 per cent in July 2021.
“Similarly, the average discount rates for CBN OMO7 bills for comparable tenors remained flat at a range of 7.00 per cent – 10.10 per cent in July 2021.
“The 10Y and 30Y FGN10 Bond were issued at 12.35% and 13.25 per cent respectively, whilst the 20Y FGN Bond was reopened at 13.15 per cent in July 2021, relative to 15.92 per cent recorded at the previous auction in August 2017.”
