Investors, Exporters FX Market Hits over $1bn Turnover in One Week

Investors’ & Exporters’ (I&E) FX window grossed a total of $1.10 billion in trade for the week ended August 4, 2017, 33.16 percent increase from $822.73 million recorded the previous week, data from the FMDQ Securities Exchange show.

This brings the total value traded at the window since its inception to $6.51 billion.

The Central Bank of Nigeria (CBN) introduced I&E window in April 2017, as a step towards resolving foreign currency liquidity dilemma, which sabotaged economic growth for more than two years and sparked fears of a looming huge devaluation of the naira among investors.

The window proved a massive relief for these investors as they have been seen returning to the Nigerian market since the introduction, after their flight following the FX impasse. An investor, who spoke with BusinessDay, said the window was giving Nigeria a second chance.

“And if you blow it, there will be far reaching repercussions for Nigeria,” the investors said.
Investors have also been demanding greater liquidity that will provide them assurance of a painless exit should they begin to move huge funds into Africa’s largest economy.

The CBN appears to be living up to this demand as it continued its supply of US Dollars in the FX market. FMDQ data for the week ended August 11, 2017 showed that the CBN offered $100 million at a marginal rate of N330 to the dollar through a single Secondary Market Intervention Sales (SMIS), the wholesale session held during the week.
The apex bank also sold $50 million for small- and medium-scale enterprises, with additional $45 million for retail invisibles transactions.

Rates at the I&E FX Window closed at $/N364.78 during the week, a spread of $/N2.22 between the I&E FX Window rate and the BDC rate. In the Bureau de Change (BDC) market, exchange rate rose 0.96 per cent to close at $/N367 compared to the rate reported the previous week-ended August 4, 2017.

Likewise, the apex bank’s official rate climbed 0.02 percent within the week to close at $/305.60 against $/N305.55 reported at the end of the previous week. This saw the spread between the BDC and the CBN official exchange rates rise by $/N3.45 to $/N61.40, 5.95 per cent increase from the spread of $/N57.95 recorded for the previous week ended August 4, 2017.

Meanwhile, the 14th naira-settled OTC FX Futures contract, NGUS AUG 16 2017, which has a notional value of $488.33 million, will mature and settle on Wednesday, August 16 2017. The CBN is again expected to introduce another contract to replace the matured one and re-price its quotes on the existing 11 contracts.

In the OTC FX Futures market, $53.07 million was traded in six deals, during the week ended August 11 2017, compared with the previous week’s sum of $55.63 million, which was traded in nine deals.

Trading activity in the Spot FX market between the banks and their clients stood at $1,307.79 million with and average daily turnover of $261.56 million for the week ended August 4, 2017, 18.64 per cent increase from the $1,102.29 million and average daily turnover of $220.46 million recorded in the previous week.

Meanwhile, activity in the Spot FX market amongst banks for the same trading week revealed surge of 21.68 percent the week’s turnover of reached $463.52 million with average daily turnover of $92.70 million. This compares with $380.94 million turnover of the previous week, which had average daily turnover of $76.19 million.

Source: BusinessDay