Investors’ bullish appetite for FX, treasury bills lifts FMDQ turnover to N59.83trn in Feb.

Bamidele Famoofo

Activities in the fixed-income and currency market in February indicated that the interest of investors was bullish on foreign exchange and treasury bills, both accounting for about 70 percent of total turnover in the secondary market turnover at the FMDQ.

In the primary segment of the market, the manufacturing sector and financial institutions took the lead in listing commercial papers, jointly accounting for 54.54 percent of total turnover.

The manufacturing sector separately accounted for 36.36 percent of total commercial papers quoted in the segment in the review period.

The FMDQ Exchange in a report for the month of February showed that the Debt Management Office (DMO) sold  treasury bills valued at ₦1,444.13bn across its auctions in the Sovereign Securities segment of the Primary Market.  The value represented a 13.62 percent (₦173.11bn) MoM increase in the value of T-bills sold across its auctions in January 2025 (₦1,271.01bn).

Similarly, the DMO sold FGN Bonds worth ₦910.39bn, reflecting a MoM increase of 51.47 percent (₦309.35bn) on the amount sold in January 2025 (₦601.04bn). The demand for sovereign securities remained strong during the review period, with T.bills and FGN Bonds oversubscribed1 by 1,097.10% and 366.35 percent. Meanwhile, the Central Bank of Nigeria ( CBN) sold OMO Bills worth ₦1,395.85bn, representing a 6.94 percent (₦104.15bn) decrease on the amount sold in January 2025 (₦1,500.00bn). These securities were oversubscribed by 219.26 percent.

At the Primary Market ( Non-Sovereign Securities) segment of the market in February 2025, there were no new listings on FMDQ Exchange. However, the redemption of ₦7.50bn in non-sovereign bonds reduced the total outstanding value of non-sovereign bonds to ₦2,238.64bn.

Meanwhile, the total value of CPs quoted on the FMDQ Exchange declined by 31.86 percent (₦51.23bn) MoM to ₦109.56bn from ₦160.79bn in January 2025. During the period, eleven (11) CPs were quoted in February 2025, with the majority issued by institutions in the Manufacturing sector.

Despite the decline in quoted CPs the outstanding value of CPs increased MoM by 9.96 percent (₦59.54bn) to ₦657.43bn, offsetting the impact of the ₦50.02bn worth of CPs that matured during the review period.

Total secondary market turnover recorded on the FMDQ Exchange in February 2025 was ₦59.83trn, representing a MoM and YoY increase of 4.89 percent (₦2.79trn) and 48.41 percent (₦19.52trn) from January 2025 and February 2024 figures, respectively.

Foreign Exchange (FX) and Money Market (MM) transactions dominated secondary market activity, jointly accounting for 69.14 percent of the total secondary market turnover in February 2025.

Total spot market turnover for all products traded in the secondary market recorded on the FMDQ Exchange in February 2025 was ₦57.40trn, representing a MoM increase of 4.64 percent (₦2.55trn) from January 2025 figures. The MoM increase in total spot market turnover was driven by the increase in FI and MM turnover by 17.96 percent (₦2.81trn) and 11.28 percent (₦1.90trn) respectively, offsetting the 9.68 percent (₦2.17trn) decrease in FX market turnover. The increase in MM turnover was solely driven by the MoM increase in the Repos/Buy-backs product category. Similarly, the increase in FI turnover was driven by the MoM increase across all product categories, while CBN Special Bills remained inactive during the review period.

Spot FX market turnover recorded on FMDQ Exchange was $13.43bn (₦20.19trn) in February 2025, representing a 7.76 percent ($1.13bn) MoM decrease from the turnover recorded in January 2025 ($14.56bn).

In the FX Market, the Naira appreciated against the US Dollar, with the spot exchange rate ($/₦) decreasing by 2.10% ($/₦32.27) to close at an average of $/₦1,504.18 recorded in February 2025 from $/₦1,536.46 recorded in January 2025.

Further, exchange rate volatility decreased in February 2025, with the Naira trading within an exchange rate range of $/₦1,495.00– $/₦1,515.00 compared to $/₦1,475.00– $/₦1,560.00 recorded in January 2025.

FI market turnover in February 2025 was ₦18.47trn, representing a MoM increase of 17.96 percent (₦2.81trn) from the turnover recorded in January 2025 (₦15.65trn). The MoM increase in turnover was driven by the increase in T.bills, CBN Bills, OMO Bills, FGN Bonds, and Other Bonds transactions during the review period.

T.bills with term-to-maturity (TTM) between >6M– 12M and FGN Bonds with TTM between >5Y– 10Y were the most traded sovereign FI securities, accounting for 43.12 percent (₦3.82trn) and 28.56 percent (₦2.53trn) of the secondary market turnover for sovereign FI securities in the spot market, respectively.

The sovereign yield curve experienced a 1.22ppts MoM increase in yield spread1 to -1.41ppts in February 2025, depicting a flattening of the yield curve.

In February 2025, one (1)-year real (inflation-adjusted) yields in Nigeria and Turkey remained negative at (1.81%) and (4.72%), respectively, compared to selected emerging markets.

Total turnover in the MM segment increased MoM by 11.28 percent (₦1.90trn) to ₦18.74trn in February 2025. The MoM increase was driven by the 11.28 percent (₦1.90trn) increase in Repos/Buy-backs.

The average O/N rate and OPR rate (secured lending rate) increased MoM by 2.53ppts and 2.64ppts, respectively, to close at an average of 32.11 percent and 31.65 percent in February 2025.

Total turnover in the FX derivatives segment in February 2025 was $1.61bn (₦2.43trn), representing a MoM increase of 13.52 percent ($0.19bn) from January 2025 figures ($1.42bn). The MoM increase in the FX derivatives turnover was jointly driven by the 7.23 percent ($0.10bn) and 107.26 percent ($0.10bn) increase in FX Swaps and FX Forwards transactions during the review period.

In the Cleared Naira-Settled (USD/NGN) Non-Deliverable Forwards market, the near-month contract (NGUS Feb 26, 2025) expired with no open positions settled during the period. No new far month (60M) contract was introduced in the Cleared Naira-Settled Non-Deliverable Forwards market in the review period, continuing the trend since August 2023. Consequently, the TTM of the farthest open contract is eleven (11 months (i.e., NGUS JAN 28, 2026 contract). As a result, the cumulative NV of open Cleared Naira-Settled Non-Deliverable Forwards contracts was $0.08bn as of February 28, 2025, representing a MoM and YoY decrease of 10.14 percent ($0.01bn) and 96.53 percent ($2.20bn), respectively.