The total transactions value traded in the Foreign Exchange (Forex) market between January and March, 2018, settled at a whopping sum of N15.32 trillion, Investigations by The Daily Times revealed.
The forex market, represents a platform in which participants are able to buy, sell, exchange and speculate on currencies, and is made up of banks, commercial companies, the Central Bank of Nigeria, investment management firms, hedge funds, and retail forex brokers and investors.
But the breakdown of the figure showed that transactions in the Nigeria’s FX market stood at N6.12 trillion ($18.67bn) in March, an increase of 44.59 per cent from N4.6 trillion ($5.76bn) when compared with the value recorded in February ($12.92bn).
In January, the FX market had traded $14.01 billion, which was higher than $12.92 billion recorded in February, however, weaker than $18.67 billion transacted in the month under review. Also, in the month under review, total value traded at the Investors & Exporters FX (I&E FX) Window stood at $6.06 billion, an increase of 55.38 per cent ($2.16bn) relative to the value recorded in February ($3.90bn).
This brings the total value traded year-to-date at I&E FX Window to $15.21 billion. During the same period, the Nigerian local currency, Naira, appreciated at the Investors’ & Exporters’ (I&E) FX Window, closing the month at N360.20 per dollar from N360.41 settled as of February 28, 2018.
The Naira, also, traded at a discount to the parallel market which closed at N362.00 from N363.00 per dollar as at February 28, 2018, while the Central Bank of Nigeria’s official Spot rate appreciated slightly, gaining N0.25 to close at N305.65 from N305.90 to the dollar during the same period.
Total value traded at I&E FX Window in March settled at $6.06bn, an increase of 55.38 per cent ($2.16bn) relative to the value recorded in February ($3.90bn). This brings the total value traded year-to-date at I&E FX Window to $15.21 billion. Inter-Member trades recorded $2.00 billion in March, an increase of 47.15 per cent ($0.64bn) relative to the trades recorded in February ($1.36bn), and a 237.28 per cent ($1.40bn) increase YoY ($0.59mm).
The Member-Client trades stood at $10.98 billion, an increase of 47.50 per cent ($3.54bn) from the previous month and an 84.12 per cent ($5.02bn) increase YoY ($5.96bn). Member-CBN trades recorded $5.70 billion in March ($4.11bn in February), representing an increase of 38.48 per cent ($1.58bn) and a 277.17 per cent ($4.19bn) increase Year on Year ($1.51bn) as the effect of the Secondary Market Intervention Sales (SMIS) continued to boost activity in the FX Market The Inter-Member trades, recorded $2.00 billion in March, an increase of 47.15 per cent ($0.64bn) relative to the trades recorded in February ($1.36bn), and a 237.28 per cent ($1.40bn) increase from year-on-Year (YoY).
Meanwhile, the 21st Naira-settled OTC FX Futures contract, NGUS MAR 28, 2018, worth $437.52mm, matured and settled in March, whilst a new 12-month contract – NGUS MAR 27, 2019 – for $1.00bn, was introduced by the CBN at N361.96 per diollar. It recorded N4.16 trillion or $12.92 billion in February, a decline of $1.09 billion (7.78 per cent) when compared with $14.01billion value recorded in January, data obtained from FMDQ OTC has revealed.
Breakdown of the figure showed that total value traded at the Investors’ & Exporters’ (I&E) FX Window in February settled at $3.90 billion, representing a decline of 25.71 per cent ($1.35bn) relative to the value recorded in January ($5.25bn), bringing the total value traded at the Window Year to Date to $9.15 billion.
Meanwhile, the Naira depreciated week-on-week (w-o-w) against the dollar at the Investors & Exporters Foreign Exchange Window (I&E FX) by 0.09per cent to close at N360.32/Dollar. The depreciation is coming on the heels of weekly injections by Central Bank of Nigeria (CBN) of $210 million into the foreign exchange market.
Of the $210 million, $100 million was allocated to Wholesale (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles. The Naira also depreciated at the parallel market by 0.28per cent to N363.00/Dollar. But the Naira/Dollar rate remained unchanged at the interbank foreign exchange market and the Bureau De Change segments at N330.00/Dollar and N360/Dollar respectively.
Meanwhile, all dated forward contracts at the interbank Over-The Counter (OTC) segment appreciated amid a 0.51 per cent w-o-w increase in external reserves to $46.75 billion – spot rate, 1 month, 2 months, 3 months and 6 months contracts fell by 0.02per cent, 0.01per cent, 0.10 per cent, 0.18per cent and 0.70per cent to close N305.55/Dollar, N363.72/Dollar, N367.24/Dollar, N370.73/Dollar and N382.85/Dollar respectively.
Analysts at Cowry Assets Limited in a report said the apex bank sold Treasury Bills worth N500 billion via the secondary market. According to Cowry Assets report, “The outflows were partly offset by inflows worth N476.21 billion in matured treasury bills. Nevertheless, NIBOR fell for all tenor buckets amid sustained liquidity ease in the finanacial system – in line with our expectation: NIBOR for overnight, 1 month, 3 months and 6 months tenor buckets fell w-o-w to 3.00% (from 4.56%), 13.43% (from 14.64%), 14.17% (from 15.28%) and 15.35% (from 17.06%) respectively. “Meanwhile, while Standing Deposit Facility (SDF) which fell w-o-w by 3.93% to N593.89 billion, outweighed Standing Lending Facility (SLF) which also fell w-o-w by 9.51per cent to N211.37 billion; indicative of excess financial system liquidity.”
The report added that, “NITTY fell for all maturities tracked on sustained bullish activity: yields on the 1 month, 3 months, 6 months and 12 months maturities fell to 12.52% (from 14.09%), 13.02% (from 13.61%), 13.65% (from 14.31%) and 14.72% (from 14.90%) respectively.
“This week, T-bills worth 263.37 billion will mature via both primary and secondary market which will more than offset the treasury bills worth N58.49 to be auctioned via the primary market; viz: 91-day bills worth N5.85 billion, 182-day bills worth N29.25 billion and 364-day bills worth N23.396 billion.
“Hence we expect sustained ease in financial system liquidity with concomitant moderation in interbank rate. This, however, should warrant increased OMO auctions in order to mop up excess liquidity,” the report by Cowry Assets added.
