In August 2023, the Foreign Exchange (forex) derivatives market segment saw a total turnover of $1.49 billion (₦1.14 trillion), indicating a fall of 57.76 percent ($0.79 billion) month over month from the July 2023 number.
The MoM decline in FX derivatives turnover was caused by a decline in transactions of 13.38% ($0.21 billion) and 62.05 percent ($0.17 billion) in FX Swaps and FX Forwards, respectively, as well as a persistent lack of activity in the FX Futures market, according to the August FMDQ Securities Exchange Financial Market Report.
In the near month contract1 (NGUS AUG) of the OTC FX Futures market
Open positions having a total notional value (NV) of $0.71 billion that expired on December 30, 2023, were settled. The exchange announced the introduction of NGUS AUG 30, 2028, a far month (60M) contract, at a futures price of $/₦1,567.49. This price corresponds to the July 2023 Futures price of the previous far month contract, NGUS JUL 28, 2028.
It mentioned that as of August 31, 2023, the cumulative net value of open OTC FX Futures contracts dropped for a second consecutive month, to about $5.56 billion.
As to the exchange, the valuation as of July 31, 2023, and August 31, 2022, respectively, showed a YoY growth of 45.2% ($1.73 billion) and a MoM fall of 11.8% ($0.70 billion).
Furthermore, in August 2023, the combined turnover for the Spot and Derivatives Markets was ₦16.54 trillion and ₦1.14 trillion, respectively.
According to the report, the Spot FX Market saw a turnover of $4.37 billion (₦3.34 trillion) in August 2023, down 6.13 percent ($0.29 billion) on the same month last year ($4.66 billion).
In the foreign currency market, the Naira strengthened against the dollar. The exchange rate ($/₦) fell by 0.85 percent ($/₦6.46) to end at an average of $/₦763.04 in August 2023, down from $/₦769.51 in July 2023. It fluctuated between $/₦738.18 and $/₦789.08.
In the primary market segment, the Debt Management Office (DMO) sold T-bills valued at ₦457.20 billion during its auctions in August 2023. This is a Month-over-Month increase of 12.58 percent (₦51.10 billion) over the value of T-bills sold during its auctions in July 2023, which was N406.10 billion.
Similar to this, in August 2023 the DMO reopened two (2) 10Y, one (1) 15Y, and one (1) 30Y FGN Bond after selling FGN bonds for ₦230.26 billion. According to the exchange, the total sales amount reflected a 65.00 percent MoM decline from the amount sold in July 2023 (₦657.84 billion) for the identical FGN Bond maturities, and a 63.96 percent undersubscription of the amount offered.
Additionally, the CBN signaled a possible end to its seven-month streak of no auctions by selling OMO Bills for ₦150 billion in August 2023, its first public OMO Bills auctions of 2023.