Forex derivatives decreased by 42.34% m-o-m in January

ACCORD ING TO FMDQ, FOREIGN EX CHANGE derivatives took a month-on-month decrease of 42.34 percent, totalling $3.95 billion in the month of January.

This drop was mainly driven by a 44.89 percent decline in member-CBN FX swap turnover, while turnover in FX futures also dropped by 35.65 percent.

In January, the naira-settled OTC forex futures contract (NGUS JAN 30 2019) with total open contract of $515.09 million matured and was settled on FMDQ, while a new 12 month Futures contract (NGUS JAN 29 2020) with a notional principal of $1 billion and futures price of

364.65 per dollar was listed on the OTC Exchange

Analysis of FX turnover by product type showed that FX Spot was the main driver of the overall increase in FX turnover, with a month-onmonth increase of 462.93% ($7.84bn). The increase in FX Spot can be attributed to FX inflow for investments in the higher yielding FGN5 fixed income securities.

Total FX market turnover in January 2019 was $14.91 billion, representing a 35.36 percent month-on-month increase from the turnover recorded in December 2018 of $11.01 billion. The increase in FX turnover in January can be attributed to the 150.61 percent and 0.61 percent rise in member-clients and inter-member trades, which was only marginally offset by the 27.55 percent decrease in Member to CBN trades.

However, turnover at the Investors & Exporters (I&E) FX Window in January 2019 recorded 22.42 percent and 26.86 percent month-onmonth and year-on-year decrease respectively to close at $3.84 billion from the $4.95 billion and $5.25 billion recorded in December and January 2018 respectively.

In the first month of 2019, the Naira appreciated against the US Dollar at the I&E FX Window, gaining 97 kobo to close the month at N363.03 to the dollar, from N364 per dollar recorded in December 2018. However, relative to January 2018, the Naira has depreciated by N3.03 from N360.00 in January 2018. Similarly, the CBN Official Spot rate appreciated by 25 kobo to close at N306.75 from N307.00, which was recorded in December in 2018. At the Parallel market, the naira appreciated by N2.00 to close at N361.00 from December’s figure of N363.00.

Total Treasury bills outstanding recorded a monthon-month decrease of N0.16 trillion to close at N2.58 trillion as the CBN continued mopping up liquidity via its OMO auctions to curtail build-up of inflationary pressure.

Federal government bonds remained flat at N8.26 trillion as at January 31, 2019. Furthermore, the split in sovereign debt between long and short-term debt as at January was 76:24, close to the target ratio of 75:25 outlined in the 2016-2019 Debt Management Strategy.