Forex derivatives’ market turnover dips by 57.76% in August

.As DMO sells T.bills valued ₦457.2b

The total turnover in the Foreign exchange (forex) derivatives market segment was $1.49 billion
(₦1.14 trillion) in August 2023, representing a MoM decrease of 57.76 per cent ($0.79 billion) from the figure achieved in July 2023.

According to FMDQ Securities Exchange Financial Market Report for the month of August, the MoM decrease in the FX derivatives turnover was jointly driven by the 13.38 per cent ($0.21 billion) and 62.05 per cent ($0.17 billion) decline in transactions across FX Swaps and FX Forwards, and the sustained lack of activities in the FX Futures market, respectively.

In the OTC FX Futures market, the near month contract1 (NGUS AUG
30, 2023) expired and open positions with a total notional value (NV) of $0.71 billion settled. The exchange said a far month (60M) contract, NGUS AUG 30, 2028 was introduced at a Futures price of $/₦1,567.49, representing the same Futures price when the previous far month contract (NGUS JUL 28, 2028) was introduced in July 2023.

It pointed out that the cumulative NV of open OTC FX Futures contracts decreased for
the second consecutive month to circa $5.56 billion as at August 31, 2023.

This, according to the exchange, represented a MoM decrease of 11.18 per cent ($0.70 billion) and YoY increase of 45.2 per cent ($1.73 billion) from its value as at July 31, 2023 and August 31, 2022, respectively.

Additionally, total turnover for Spot and Derivatives Market hit ₦16.54 trillion and ₦1.14 trillion respectively in August 2023.

It stated that Spot FX Market turnover was $4.37 billion (₦3.34 trillion) in August 2023, representing a MoM decrease of 6.13 per cent ($0.29 billion) from the turnover recorded in July 2023 ($4.66 billion).

Further, the Naira appreciated against the dollar in the FX market, with the exchange rate ($/₦) decreasing by 0.85.per cent ($/₦6.46) to close at an average of $/₦763.04 in August 2023 from $/₦769.51 recorded in July 2023, trading within a range of $/₦738.18 – $/₦789.08.

On the primary market segment the Debt Management Office(DMO) sold T.bills valued at ₦457.20 billion across its auctions in August 2023, representing a 12.58 per cent
(₦51.10 billion) Month on Month increase when compared to N406.10 billion value of T-bills sold across its auctions in July 2023.

Similarly, the DMO sold FGN bonds worth ₦230.26 billion reopened two (2) 10Y, one (1) 15Y, and one (1) 30Y FGN Bond in August 2023. The exchange stated that the total sale represented 63.96 per cent undersubscription of the amount offered, and a 65.00 per cent (₦427.58 billion) MoM decrease on the amount sold in July 2023 (₦657.84 billion) for the same FGN Bond maturities.

Also, the CBN sold OMO Bills worth ₦150 billion in its first public OMO Bills auctions for
2023, in August 2023, signalling a potential end to its consecutive seven months no auctions trend.