Nigerian fixed-income and currencies markets recorded transactions valued at N13.03 trillion in January 2021 with foreign exchange (forex) accounting for N3.26 trillion.

A report by FMDQ Group at the weekend showed that total foreign exchange (forex) market turnover in January 2021 stood at $8.29 billion or N3.26 trillion, a decline of $11.43 billion from $19.72 billion recorded in December 2020. In January 2021, the Central Bank of Nigeria’s Official Spot Forex rate remained constant at an average of N379.00 per dollar.

At the Investors’ and Exporters’ (I&E) Window, the Naira appreciated against the dollar, gaining 0.23 per cent or 90 kobo to close at an average ofN394.03 per dollar in January 2021. Also, in the parallel market, the naira appreciated against the dollar gaining 0.28 per cent or N1.35 per dollar to close at an average of N474.70 per dollar in January 2021.

According to the report, forex and Open Market Operations (OMO) bills transactions were the highest contributors to the FIC markets in January 2021, jointly accounting for 55.42 per cent of the total FIC market turnover.

The report attributed the decline in the forex market to reduced interventions by the Central Bank of Nigeria (CBN) as well as decline in foreign portfolio investment net flows within the month.

In the over-the-counter (OTC) forex futures market, the near month contract6 -NGUS JAN 27, 2021 with a total outstanding notional value  of $1.61 billion matured and was settled, while a new long-term, 60-month s contract, NGUS JAN 28, 2026 was introduced at a futures price of N613.69 per dollar, representing a 0.92 per cent increase in the futures price, compared to the offer rate N608.10 per dollar of the previous 60-months contract of NGUS DEC 31, 2025.

The total notional value of open OTC forex futures contracts as at January 29, 2021 stood at $7.13 billion, representing a further decrease of 11.87 per cent from its value as at December 31, 2020, a continuation of its downward trend since May 2020.

In the primary markets, average discount rates for the 91-day, 182-day and 364-day Treasury bills increased by an average of 0.34 percentage points from December 2020 to close at a range of 0.53 per cent – 1.75 per cent in January 2021, while the discount rates for CBN OMO bills decreased by an average of 0.30 percentage points to close at a range of 1.51 per cent – 5.74 per cent in January 2021, compared with December 2020. Notably, the CBN Special Bills introduced in December 2020 was issued by the CBN at 0.50 per cent and ended the month trading at a discount with yields reaching 0.52 per cent on January 29, 2021

The report showed that the coupon rates for the 10-year, 15-year and 25-year sovereign bond issuances in January 2021 increased by an average of 1.91 percentage points to close at a range of 7.98 per cent  to  8.95 per cent in January 2021.

The total value of Treasury bills and OMO bills outstanding as at January 29, 2021 declined  respectively by 4.78 per cent and 33.71 per cent to N2.59 trillion and N3.56 trillion compared with December 2020 while the total value of Federal Government of Nigeria  bonds outstanding as at January 29, 2021 increased by 1.59 per cent to N10.87 trillion as against N10.70 trillion recorded as at December 31, 2020. This resulted in the 0.29 per cent increase in sovereign capital market debt outstanding from N13.78 trillion in December 2020 to ?13.82 trillion in January 2021.

The report showed an upward shift in the sovereign yield curve between December 2020 and January 2021 across all tenors, excluding the one-year tenor, with the highest shift recorded on the 20-year tenor as yields increased by 2.83 percentage points compared to December 2020.

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