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Forex

FX Spot, Forwards, Futures Markets Record $1.252bn Turnover

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FMDQ Group - Investors King

The foreign exchange (FX) Spot, Forwards and Futures markets on the FMDQ Securities Exchange recorded a total turnover of $1,250.97 million for the week ended May 28, 2021.

This represented an increase of 0.72 per cent ($8.97 million) from the $1,242.00 million reported the previous week.

The week-on-week increase in turnover, according to the exchange was driven by the 57.35 per cent ($128.13 million) increase in FX Derivatives turnover.

According to analysis by FMDQ, the increase in FX Derivatives turnover was driven by the increase of 299.8 per cent ($142.74 million) in FX Futures turnover, resulting in an increase in FX Derivatives’ contribution to total FX market turnover, by 14.22 percentage points to 28.1 per cent from 13.88 per cent recorded in the previous week.

On the Investors’ & Exporters’ (I&E) FX window, the total value of trade was $899.42 million, representing a decrease of 11.7 per cent ($119.17 million) from $1,018.59 million traded in the week-ended May 21, 2021.

A further analysis of the turnover on the FMDQ platform showed that the weekly average Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate depreciated, losing $/N0.07 to close at $/N410.91, compared to $/N410.84 recorded in the previous.

However, on the Bureau-de-Change (BDC) market, the naira fell against the United State (US) dollars by $/N7 to close the week at $/N490, representing a 1.45 per cent depreciation when compared to $/N483.00 recorded in the previous week, resulting in a spread of $/N79.09 between the BDC rate and the weekly average NAFEX rate

In the FX Futures market, $190.35 million worth of FX Futures contracts were traded in 22 deals, representing an increase of 299.81 per cent ($142.74 million) when compared to $47.61 million traded in five deals the previous week.

Also in the FX Futures market, the 59th FX Futures contract, NG/US MAY 26 2021, matured and settled on FMDQ Exchange on Wednesday, May 26, 2021.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Forex

Haven Currencies Gained Across the Board as Investors Assesses New COVID Variant

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One-hundred euro, from top, U

Investors are moving their funds to known safe-haven currencies to curb risk exposure while they evaluate the effect of the new covid variant on global financial markets.

Two cases of the new Covid variant called B.1.1.529 that emanated from South Africa were reported in Hong Kong on Friday, increasing concerns it could hurt global economic recovery and compel nations to start closing the borders going into the new year.

Leading safe-haven currency, the Japanese Yen gained against the United States Dollar to 113.151 at 8:40 pm Nigerian time, down from 115.450 it attained on Thursday as shown below.

Similarly, the Swiss Franc outperformed other currencies as its attractiveness surged among global investors looking to avert catastrophe amid rising global uncertainties.

Swiss Franc rose against the United States Dollar to 0.92187 from 0.93604 it peaked on Thursday before news that the United Kingdom and other nations were considering shutting their borders.

The Euro rebounded against the United States Dollar after plunging from 1.18905 it traded in August to 1.12039 before paring losses to 1.13129 when the news of new covid variant became a concern.

Surprisingly, gold, a known haven asset, failed to sustain its earlier gain and pulled back from $1815.46 to $1788.10 at the time of writing. Another indication of rising global uncertainty.

Even experts like Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA, had earlier predicted that gold will shine given its characteristics as a haven asset.

He said “Times like this are when gold shines and we’re seeing investors flock back to an old reliable friend today. It has pulled a little off its highs after hitting $1,815 earlier in the session but it remains above $1,800 at the time of writing. It’s an interesting one for gold and bonds, as the situation now is very different from last year.”

Investors however seems to be dumping the tradition risk aversion commodity for something more stable, especially with bitcoin and other cryptocurrencies now doing better number in terms of gain in a period like this.

Crude oil has dropped more than 5 percent or $10 today as energy traders aggressively closed the positions to better assess the situation.

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Naira

Naira Faces Temporary Stability at the Official Window

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Naira Exchange Rates - Investors King

After closing at N415.07 on Wednesday, the currency temporarily rose to open at N413.58 per dollar on Thursday, before returning to close at N415.07 per dollar by the end of the day. This is according to the data obtained from the Investors and Exporters window.

The last few days have seen the emergence of marginal changes in the value of the Naira against the dollar, with the changes not being more than N1 or N2 at a time. The constant flux of the Naira at a marginal rate seems to suggest that the currency will remain at this level over the upcoming festive period.

This could however be changed, but only by drastic action on the part of the Central Bank of Nigeria.

The FMDQ website shows the Spot rate and Forward rate of the Naira, with the Spot rate representing the range of prices at which the Naira traded throughout an entire day. For Thursday, the Naira traded between N406 per dollar and N452 per dollar.

This means that all the dollar transactions that took place across Thursday took place with the Naira trading at a high of N406 per dollar and at a low of N452 per dollar. However, at the end of the day the Naira had settled down at N415.07 per dollar.

The Forward rate refers to the value of the Naira against the dollar which applies to transactions which have been agreed to take place in the future, and not immediately. Thursday’s forward rate was particularly low, with its highest coming at N452.61 per dollar, and the lowest falling in at N453.75 per dollar.

This could particularly discourage individuals or groups who would have been seeking to agree on some future deals on Thursday, with the low prices not spelling positivity for trade.

The turnover of the dollar recorded on Thursday sat ta $98.07 million, meaning that the entirety of the dollar traded across all the rates amounted to a little less than $100 million.

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eNaira

eNaira Compatible With Other Countries’ Digital Currencies

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The Central Bank of Nigeria (CBN) has stated that the execution of the country’s digital currency will be done in four different phases, and also lead to the cooperation of the eNaira with the digital currencies from other central banks.

This was said at the licensed payment service providers’ engagement session by the apex bank’s Director of the Information Technology Department, Rakiya Mohammed. The session took place in Lagos on Monday and consisted of interaction with a much wider category of industry players.

A statement released by Rakiya Mohammed stated that the CBN and important stakeholders in the payments ecosystem, especially the Payment Service Providers (PSPs) and a wide community of fintech groups, during the engagement session decided to collaborate and ensure that the eNaira which was launched recently is adopted by more people or groups.

Mohammed stated that the complete execution of the digital currency would be done in four different phases, which would culminate in eNaira payment solutions offline, payment across borders and the “interoperability of the eNaira with those of other central banks.”

She also confirmed that the CBN was not competing with the Deposit Banks, neither was it competing with other actors in the payment system space in Nigeria.

According to Mohammed, the engagement session was a continuation of the CBN’s plan to include every stakeholder. She also stated that the country’s apex bank was welcoming of any suggestions and transformations which are directed at adding value to the digital currency and improving the currency’s user experience.

The PSPs (as well as the huge community of fintech groups) were also encouraged to look for more innovative ways to assist members of the public when possible, in the onboarding process and use of eNaira. They have also been encouraged to develop solutions for offline eNaira services, which include cards, wearables and Unstructured Supplementary Service Data (USSD).

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