Money market repos continue to decline, decrease by 9.65% in September
TURNOVER IN THE REPUR CHASE agreements/buy-backs segment (repos) of the money market has declined consistently since the turn of the year and has continued it’s free fall, recording a decline of 9.65 percent to N3.17 trillion.
A repo is a form of short term borrowing mainly in government securities (employed by the Central Bank of Nigeria), where the dealer sells an underlying security to investors and buys them back shortly afterwards at a slightly higher price.
According to market sources the decline is as a result of decreases seen in the overnight and open buy back money market rates.
Data from the Financial Market Dealers Quote (FMDQ) shows that in September 2019, turnover was recorded at N3.17 trillion, representing a N0.34 trillion month-on-month (m-o-m) decrease from N3.51 trillion recorded in August 2019.
An analysis of turnover in unsecured placements/ takings in September 2019 showed a spike. Turnover for the unsecured placements increased m-o-m by 215.44 percent to N0.28 trillion, from the N0.09 trillion recorded in August 2019, and a year-on-year increase of 652.48 percent (N0.24trn) from the turnover recorded in June 2018 (N0.04trn). This can easily be linked to the increased liquidity in the inter-bank market
The month-on-month decrease in total turnover in the money market is attributable to the 204 basis points and 201 basis points decrease in average money market overnight lending rate (OVN) and open buy-back (OBB) rates respectively, which closed at 11.91 percent and 10.83 percent in September 2019 from 13.95 percent and 12.84 percent in August 2019, the FMDQ said.
A survey of the market’s performance in the review period showed that total number of trades executed reported on the E-Bond Trading System in September 2019 was 13,226, representing a 29.09 percent (5,426) month-on-month decrease in the number of trades executed in August 2019 (18,652), driven by a month-on-month decrease in Treasury bills and FGN bonds’ trades by 28.79 percent (4,867) and 31.96 percent (559) respectively.