Fixed Income, Currency Markets Transactions Gain 51% Rise To N29trn
More investors are turning to the fixed income and currency (FIC) markets as the market recorded a jump of 51% in the value of investment in the month of March.
The market, which is run by the FMDQ OTC Securities Exchange recorded transactions valued at N28.98 trillion, up from N19.18 trillion in February 2019. Compared to the March 2018, the transactions represented an increase of 84.47 per cent over the N15.71 trillion recorded.
According to data made available on Monday, Treasury Bills (T.bills) and foreign exchange (FX) market segments remained major drivers of turnover in the FIC markets, jointly accounting for 75.71 per cent of turnover in March.
A breakdown of transaction in the FX market, showed that turnover in March 2019 was $33.26 billion, representing a 127.92 per cent jump, compared with $18.67 billion the previous month.
Analysis of FX turnover by trade type indicated an increase across all three segments, as FX turnover for Inter-member, Member-clients and MemberCentral Bank of Nigeria trades increased by 76 per cent, 107.4 per cent and 221.5 per cent respectively. The increase in FX turnover for Member-Clients and Member CBN was driven by the increase in turnover in OTC FX Futures market segment which is largely attributable to increased foreign portfolio investor inflows.
Analysis of FX turnover by product type showed an increase in both FX Spot and FX Derivatives, with FX Spot recording an increase of 144.6 per cent ($12.69 billion) and accounting for 67.98 per cent of the total increase in FX turnover.
The increase of 102.64 per cent ($5.97 billion) in FX Derivatives was driven by increases in FX Forwards, swaps and futures turnover by 76.61 per cent, 73.6 per cent and 282.28 per cent respectively.
Total T.bills outstanding recorded an increase of 4.31 per cent (N0.69 trillion) to close at N16.8 trillion, with OMO Bills accounting for 100 per cent of the increase while actual T.bills outstanding remained unchanged, as the CBN continued its liquidity
mop up via OMO auctions to curtail build-up of inflationary pressure. Similarly, FGN bonds outstanding value increased by 1.43 per cent (N0.12 trillion) to close at N8.64 trillion as at March 29, 2019.
Trading intensity in the T.bills and FGN bonds markets increased from 0.54 and 0.12 in February to 0.60 and 0.18 in March respectively. Trading intensity in markets stood at 1.60 and 0.38 respectively compared to 1.27 and 0.33 as at the same period in 2018, due to the 52.61 per cent growth in T.bills and FGN bonds year-to-date turnover.
T.bills within the 6-12 months maturity bracket remained the most actively traded in March, accounting for 59.89 per cent of the total FI market turnover. In March weighted average rate of yields on short- and long-term maturities on the sovereign yield curve increased by 0.47ppts and 0.26ppts respectively.
Conversely, weighted average rate of yields on medium-term maturities on the sovereign yield curve declined by 0.91ppts.