Amid scarcity, investors’ and exporters’ foreign exchange (FX) trade at the FMDQ Exchange market increased to N52.8 trillion in the first quarter of 2024, a 207.7per cent increase over the N17.16 trillion in the first quarter of 2023.
According to the FMDQ monthly report, foreign exchange transactions dominated trading by investors and foreigners in the period under review, contributing about 46 per cent of the N114.83 trillion total market turnover by-products.
The total market turnover by-products was at N52.05 trillion in 2023.
Turnover by-products comprise foreign exchange, Treasury bills, CBN special bills, FGN bonds, other bonds and the money market.
Meanwhile, the latest FMDQ data on turnover by-products for March 2024 revealed that the secondary market turnover on FMDQ Exchange in March 2023 was N24.35trillion, representing a Month-on-Month (MoM) and Year-on-Year (YoY) increase of 66.07 per cent or N9.69trillon and 60.61 per cent or N9.19trillion from February 2023 and March 2022 figures respectively.
The report also revealed that the Naira appreciated marginally against the US Dollar, with the spot exchange rate ($/N) decreasing by 0.94bps ($/N0.04) to close at an average of $/N461.50 in March 2023 from $/N461.54 recorded in February 2023.
“Further, exchange rate volatility decreased marginally in March 2023 as the Naira traded within an exchange rate range of $/N461.00 – $/N462.00 compared to $/N461.00 – $/N462.17 recorded in February 2023.”
According to the report, the total value of Commercial Paper (CPs) quoted on the FMDQ Exchange in March 2024 was N112.62billion, representing a MoM increase of 123.76per cent or N62.29billion from the value of CPs quoted in February 2024.
It reported that N39.26 billion CPs matured and were redeemed resulting in a 9.28 cent or N73.36billion MoM increase in the total outstanding value to N864.11billion in March 2024.
On fixed income (FI) market turnover in March 2024, it was at N12.04trillion, representing an MoM increase of 13.22 per cent or N1.42trillion from the turnover recorded in February 2024 when it was at N10.71 trillion.
“The MoM uptick in the FI market turnover was driven by the 33.36 per cent or N1.40trillion, 45.45per cent or N0.86trillion, and 17.76 per cent or N0.15trillion, increase in turnover across TBills, FGN Bonds, and Special Bills, offsetting the 28.96per cent or N1.06trilliion and 28.52 per cent or N0.02 trillion decline in OMO Bill and Other Bonds* transactions.
“As a result, the trading intensity (TI) for FGN Bonds and T.Bills increased MoM by 0.04bps and 0.03bps to 0.12 and 0.60, respectively,” the report revealed.
Business activities rebound after the 2023 general elections amid a steady rise in global oil prices as global economic activity has been mixed during this year, with distinct signs of improvement in the United States and China.
Speaking on increasing foreign exchange turnover trade, the vice president of Highcap Securities Limited, David Adnori attributed the growth recorded in the total foreign exchange turnover in Q1 2024 to increasing business activities amid a double-digit inflation rate.
Adnori expressed that the double-digit inflation, and hike in the Monetary Policy Rate (MPR) by CBN to 24.75 per cent has contributed to further slowdown foreign exchange demand by investors and exporters.
Also speaking, Chief Research Officer, InvestData Consulting Limited, Omordion Ambrose said “The global economy growth in 2023 was better than 2022. Nigeria’s economic growth in 2024 is far better than in 2023 when there was political tension.
“The growth in foreign exchange turnover trade in Q1 2024 reflects demand by investors and exporters,” he added.
