Stories by Chinwendu Obienyi
Turnover in the Fixed Income and Currency (FIC) market for the month ended December 31, 2018 closed at N17.71 trillion, representing a 9.09 per cent (N1.77 trillion) month-on-month (MoM) decrease on the turnover of N19.48 trillion recorded in November.
This represents a 49.33 per cent or N5.85 trillion year-on-year (YoY)increase even as treasury bills (T. bills) and Foreign Exchange (FX) transactions remained major drivers of turnover in the FIC market, jointly accounting for 76.48 per cent of turnover in December and higher by 3.47 percentage points (ppts) from their level of contribution in November (73.01 per cent).
According to a report obtained from the Exchange’s website by Daily Sun, total FX market turnover in December was $11.01 billion, representing a 17.22 per cent ($2.29 billion) MoM decline from the turnover recorded in November ($13.30 billion).
Similarly, turnover at the Investors & Exporters (I&E) FX Window recorded an 8.50 per cent($460 million) MoM decrease to close at $4.95 billion from the $5.41 billion recorded in November while YTD3 turnover at the I&E FX Window closed at $59.75 billion as at December 31, 2018.
The decrease in FX turnover in December was attributed to the 41.96 and 2.66 per cent decline in Member-Clients and Inter-Member trades which was only partly offset by the 6.75 per cent increase in Member-CBN4 trades.
Analysis of FX turnover by product type showed that FX Derivatives was the main driver of the overall MoM decline in FX turnover, with a MoM increase of 41.33 per cent ($2.73 billion), driven mainly by an 84.79 per cent rise in FX Swaps turnover.
Conversely, FX spot recorded a MoM decrease of 74.75 per cent ($5.01 billion). In December, the 30th Naira-settled OTC FX Futures Contract (NGUS DEC 26, 2018) with total open contract of $664.78million matured and was settled on FMDQ, while a new 12-month Futures contract (NGUS DEC 24, 2019) with a notional principal of $1.00 billion and futures price of $/N366.24 was listed on the OTC Exchange.
During the month under review, the Nigerian Naira appreciated against the US 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.
For the Fixed Income Market (T. bills and FGN6 Bonds), total T. bills and FGN Bonds outstanding recorded a MoM decrease of N1.13 trillion and increase of N100 billion to close at N12.39 trillion and N8.26 trillion 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 while 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 as growth in outstanding debt may have impacted trading on some securities in 2018.