The month-over-month (MoM) reduction in spot FX market turnover from March 2024 ($12,61 billion) to April 2024 ($9.12 billion, or N11.14 trillion) was 27.68% ($3.49 billion).
The News Chronicles was able to view the April FMDQ Markets Monthly Report, which included this information.
Nigeria’s foreign exchange market has seen significant difficulties, mostly as a result of changes in the price of oil globally and changes in economic policy that impact liquidity.
According to the data, the spot exchange rate ($/N) decreased by 22.45% ($/N279.38) to close at an average of $/₦1,244.66 in April 2024 from $/N1,524.04 recorded in March 2024. This indicates that the Naira has experienced a sharp appreciation versus the US dollar in the foreign currency market.
It further stated that in contrast to the $/N1,300.43 – $/N1,627.40 recorded in March 2024, the Naira traded within an exchange rate range of $/N1,072.74 – $/N1,419.11 in April 2024, indicating a minor rise in exchange rate volatility.
Fixed Income Market Spot
A decline of 30.87% (N3.72 trillion) was seen in the market turnover of FI in April 2024 compared to the turnover of N12.04 trillion in March 2024, as per the report.
According to FMDQ, the decline in turnover across T.Bills, FGN & Other Bonds, OMO Bill, and Special Bills transactions accounted for 18.35% (N1.03 trillion), 31.94% (N0.90 trillion), and 34.92% (N0.91 trillion) of the MoM decline in turnover.
As a result, MoM dropped by 0.04bps and 0.20bps to 0.08 and 0.40, respectively, for the trading intensity (TI) for FGN Bonds and T.Bills.
“T.bills with term-to-maturity (TTM) between >6M – 12M and FGN Bonds with TTM between >5Y – 10Y, were the most traded sovereign FI securities, accounting for 64.87% (N4.18 trillion) and 16.25% (N1.05 trillion) of the secondary market turnover for sovereign FI securities in the spot market, respectively.”
“In April 2024, the sovereign yield curve experienced a 4.43ppts MoM decrease in yield spread1 to -0.06ppts, indicating an inversion of the yield curve.”
“In April 2024, real yields—adjusted for inflation—continued to decline across the yield curve, primarily due to rising inflation that continues to outpace policy interest rates,” the statement noted.
Financial Market
The study states that in April 2024, the overall turnover in the MM segment fell by 44.40% (or N5.27 trillion) to N6.59 trillion. Repos/buy-backs and unsecured placement/takings transactions decreased by 44.43% (N5.27 trillion) and 9.44% (N1.02 billion), respectively, and were the main causes of the MoM decline.
“To close at an average of 29.20% and 28.22% in April 2024, the average O/N rate and OPR rate (secured lending rate) decreased MoM by 0.10 ppts and 0.23 ppts, respectively.”
Forex Derivatives Market
With a total turnover of $1.18 billion (₦1.44 trillion) in April 2024, the FX derivatives segment saw a MoM decline of 68.22% ($2.53 billion) from March 2024 data.
According to the Exchange, the FX Futures market was dormant during the review period, but the FX Swaps and Forwards turnover decreased by 61.03% ($1.70 billion) and 90.12% ($0.83 billion), respectively, and accounted for the MoM reduction in the FX derivatives turnover.
The near month contract (NGUS APR 24, 2024) expired in the cleared Naira-Settled (USD/NGN) Non-Deliverable Forwards market, and open positions with a total notional value (NV) of $0.50 billion were settled.
However, no new month (60M) contract was added to the cleared Naira-Settled Non-Deliverable Forwards market during the review period, maintaining the pattern that began in August 2023.
As a result, fifty-two (52) months is the TTM of the farthest open contract (NGUS AUG 30, 2028 contracts).
“As a result, the cumulative NV of open Cleared Naira-Settled Non-deliverable Forwards contracts decreased to $1.59bn as of April 30, 2024, representing an MoM and YoY decrease of 23.92% ($0.50bn) and 69.60% ($3.64bn), respectively, and continuing its downward trend for the tenth (10th) consecutive month,” it stated.
Total spot market turnover in April 2024 was N26.06 trillion, a 39.68% decrease from March 2024, driven by declines in FX, MM, and FI turnovers of 42.27%, 44.40%, and 30.87%, respectively.
