FMDQ secondary market dips by 61.6% in January as DMO sells N418.2b bonds

The secondary market turnover on the FMDQ Exchange in January 2024 was ₦21.07 trillion, representing a 41.1 per cent month-on-month (MoM) decrease and 61.6 per cent year-on-year (YoY) increase.

Besides, the DMO sold Federal Government of Nigeria (FGN) bonds worth ₦418.2 billion in the month.

According to FMDQ Securities Exchange, foreign exchange (FX), CBN bills and money market (MM) transactions dominated secondary market activity, accounting for 81.05 per cent of the total secondary market turnover in the month.

Also, total spot market turnover for all products traded in the secondary market during the period was ₦16.9 trillion, representing a MoM decrease of 43.9 per cent (₦13.18 trillion) from December 2023 figures.

The exchange explained that the MoM falls in total spot market turnover were jointly driven by a decrease in turnover across all spot market product categories, with contributions by FX, MM and fixed income (FI) transactions falling MoM by 38.5 per cent (₦2.52 trillion), 21.5 per cent (₦1.54 trillion) and 55.9 per cent (₦9.12trillion) respectively.

Also, spot FX market turnover in January 2024 was $4.37 billion (₦4.03 trillion), representing a MoM decrease of 40.5 per cent ($2.97 billion).

In the FX market, dollar appreciated against the naira, with the spot exchange rate ($/₦) increasing by 10.4 per cent ($/₦93.7) to close at an average of $/₦990.96 from $/₦897.3 recorded in December 2023, as naira traded within an exchange rate range of $/₦838.95 – $/₦1,482.57 compared to $/₦806.73 – $/₦1,099.05 recorded in December 2023.

In the FI market, turnover in the segment stood at ₦7.2 trillion, representing a MoM decrease of 55.9 per cent (₦9.12 trillion) from the December figure.

It explained that the MoM decreases in the FI market turnover was driven by the 62.3 per cent (₦3.24 trillion), 2.54 per cent (₦0.06 trillion), 79.5 per cent (₦3.49 trillion), 53.27 per cent (₦2.28 trillion) and 59.45 per cent (₦0.05 trillion) decrease in turnover across T-Bills, OMO Bills, CBN Special Bills, FGN Bonds and other bonds, respectively.

As a result, the trading intensity (TI) for T-Bills and FGN bonds within the period decreased MoM by 0.56bps and 0.11bps to 0.3 and 0.1, respectively.

For the FX derivatives market, total turnover in the segment in January 2024 was $4.56 billion (₦4.2 trillion), representing a MoM decrease of 29.5 per cent ($1.91 billion) from December 2023 figures.

The MoM decrease in the FX derivatives turnover was jointly driven by the 27.7 per cent ($1.71 billion), 62.50 billion ($0.15 billion) and 100.00 per cent ($0.05 billion) decrease in FX Swaps, FX Forwards and FX Futures transactions, respectively.

Further breakdown of the report showed that the DMO sold T-bills valued at ₦381.2 billion across its auctions in January 2024, representing a 67.8 per cent (₦803.6 billion) MoM decrease on the value of T-bills sold across its auctions in December 2023 (₦1,184.97 billion).