Spot FX market turnover was $6.72 billion (N10.01 trillion) in June 2024, representing a 41.17% ($4.70 billion) a Month-on-month (MoM) decrease from the turnover recorded in May 2024 ($11.42 billion)
This was contained in the FMDQ Markets Monthly Report for June 2024 seen by Nairametrics
Nigeria’s foreign exchange market has faced considerable challenges, primarily due to fluctuations in global oil prices and economic policies affecting liquidity.
The report noted that in the FX Market, the Naira depreciated against the US Dollar, with the spot exchange rate ($/N) increasing by 3.61% ($/N51.87) to close at an average of $/N1,487.74 in June 2024 from $/N1,435.87 recorded in May 2024.
It added further, exchange rate volatility decreased in June 2024 as the Naira traded within an exchange rate range of $/N1,473.66 – $/N1,510.10 compared to $/N1,173.88 – $/N1,533.99 recorded in May 2024.
Spot Fixed Income Market
According to the report, FI market turnover in June 2024 was N7.72 trillion, representing a MoM decrease of 30.47% (N3.38 trillion) from the turnover recorded in May 2024 (N11.10 trillion).
FMDQ noted that the MoM decrease in turnover was driven by the decrease in turnover across all FI product categories offsetting the 60.51% (N0.02 trillion) increase in Other Bonds transactions
As a result, the trading intensity (TI) for FGN Bonds and T.Bills decreased MoM by 0.19bps and 0.03bps to 0.14 and to 0.05, respectively.
“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 50.18% (₦1.56trn) and 21.82% (₦0.68trn) of the secondary market turnover for sovereign FI securities in the spot market, respectively
Although, the sovereign yield curve experienced a 0.04ppts MoM increase in yield spread1 to -0.76ppts in June 2024, the yield curve remained inverted
Real (inflation-adjusted) yields remained negative across the yield curve in June 2024, declining further as rising inflation continues to outpace policy interest rates,” it said.
Money Market
According to the report, total turnover in the MM segment decreased MoM by 34.50% ( N4.33 trillion) to N8.22 trillion in June 2024. The MoM decrease was driven by the 34.74% (N4.33 trillion) and the 5.89% (N5.40 trillion) decrease in Repos/Buy-backs and Unsecured Placement/Takings transactions, respectively
“The average O/N rate and OPR rate (secured lending rate) increased MoM by 2.88ppts and 2.75ppts respectively, to close at an average of 27.49% and 26.85% in June 2024,” FMDQ said.
What you should know
Total spot market turnover for all products traded in the secondary market in June 2024 was N25.95 trillion, representing a MoM decrease of 35.16% (N14.07 trillion) from May 2024 figures.
- The MoM decrease in total spot market turnover was driven by the decrease in turnover across all spot market product categories, as FX, FI and MM turnover decreased MoM by 38.84% (N6.35 trillion), 30.47% (N3.38 trillion) and 34.50% (N4.33 trillion), respectively.
- The decrease in MM turnover was driven by the MoM decrease in Repos/Buy-backs and Unsecured Placement/Takings transactions. Similarly, the decline in FI turnover was driven by the decrease in FGN Bonds, T.bills, OMO Bills, and CBN Special bills offsetting the increase in Other Bonds.