FX, OMO Bills dominate activity in debt market in January

Foreign Exchange (FX) and Open Market Operation (OMO) Bills have continued to drive activity in the fixed income and currency market as they accounted for N15.54 trillion, representing 67.02 percent of total turnover in the fixed income and currency (FIC) market in January.

Breakdown of activity in the FIC market in January shows that FX and OMO Bills accounted for N15.54 trillion out of N23.19 trillion transactions recorded in the fixed income and currency market within the month.

Meanwhile, activity in the FIC rose to N23.19 trillion for the month ended January 31, 2020, representing a Month-on-Month (MoM) increase of 40.97 percent from N16.45 trillion recorded in December 2019 and year-on-year (YoY) increase of 53.78 percent from N15.08 trillion in January 2019.

Specifically, total foreign exchange transaction stood at N8.85 trillion, representing 38.16 percent of the total turnover in the fixed income and currency market during the period, while OMO bills accounted for N6.7 trillion or 28.86 percent of the total turnover in the FIC market in January.

Transactions in money market instruments ranked third, contributing N4.3 trillion or 18.48 percent of the total trades; FGN Bonds accounted for 12.55 percent or N2.9 trillion of the turnover volume during the period, while Treasury Bills and other bonds accounted for the remaining 1.93 percent or N0.4 trillion of the turnovers.

January trading report from FMDQ Group shows that total FX turnover rose by 31.71 percent MoM to N8.85 trillion from N7.58 trillion in December 2019.

Analysis of FX market turnover by trade type indicated MoM increases across all categories, with Member-Client trades recording the highest MoM increase at 36.15 percent. Analysis by product type indicated that the MoM increase in FX turnover was driven more by the 40.47 percent increase in FX derivatives turnover, which accounted for 58.35 percent of the MoM increase in total FX market turnover compared to the 24.33 percent increase in FX Spot turnover.

At the end of January 2020, the outstanding value of Treasury bills increased MoM by 2.71 percent to N2.65 trillion. Similarly, the outstanding value of FGN bonds increased MoM by 4.35 percent to N9.84 trillion.  However, the outstanding value of OMO bills decreased by 6.23 percent MoM to close at N12.20 trillion in January 2020.

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