The Fixed Income and Currencies (FIC) Market of FMDQ Securities Exchange rose to N116.21 trillion in the first 7 months of 2022.
This shows a 7 per cent increase over N109.02 trillion traded in seven months of 2021.
The major instruments contributing to the FIC market are the Foreign Exchange market, Treasury Bills, Open Market Operations (OMO) and Central Bank of Nigeria (CBN) Special Bills, FGN & Other Bonds and the money market.
Analysis of numbers released by FMDQ showed that the Foreign Exchange market dominated trading in the FMDQ Exchange’s FIC market, contributing 30.4 per cent between January and July 2022 as against 23.41 per cent reported in the corresponding period.
According to the FMDQ numbers, total foreign exchange market turnover increased by 38.6 per cent to N35.38 trillion in seven months of 2022 from N25.52 trillion reported in seven months of 2021.
Finance analysts attributed the increasing foreign exchange trading at the FMDQ Exchange market to increasing business activities towards the 2023 general elections, stressing that Nigeria is experiencing one of its worst foreign exchange crises in history due to increasing demand for foreign exchange amidst low supply.
According to the Chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion, the growth in increasing demand for foreign exchange translated into an improvement in global economic activities. However, he warned that the crisis between Ukraine and Russia might affect demand going forward.
Omordion expressed that the domestic economy has witnessed more business activities in seven months of 2022 and demand for foreign exchange has increased significantly.
On his part, an analyst at PAC Holdings, Mr Wole Adeyeye attributed the growth recorded in the total foreign exchange turnover in seven months of 2022 to increasing economic activities.
“The demand by investors and exporters foreign exchange in the first four months of 2022 has depreciated the local currency and we have witnessed volatility in the foreign exchange market,” he explained in a telephone interview with THISDAY.
With the increasing total foreign exchange turnover in the FMDQ, the Naira has continued to depreciate.
Findings revealed that Naira depreciated against the US Dollar, losing 2.5 per cent or N10.46/Dollar to close at an average of N427 01/ Dollar at the Investors & Exporters Foreign Exchange Market (I & E FX) in July 2022 from N416.55 recorded in January 2022.
In a recent report, CSL Stockbrokers Limited, (CSLS) stated Nigeria is experiencing one of its worst foreign exchange crises in history due to increasing demand for foreign exchange amidst low supply.
The firm noted that despite the high oil price, occasioned by the Russia-Ukraine war, Nigeria has failed to benefit from it due to limited production and the maintenance of a subsidy regime, which is estimated to cost the country at least N4trillion this year.
According to CSL Stockbrokers, high oil prices imply an increased cost of refined products and Nigeria continues to spend a huge part of its FX earnings on the importation of Petroleum Motor Spirit (PMS) and other refined products due to the complete absence of local refining capacity. It added, “The country has also failed to increase its non-oil exports despite a few projects introduced by the CBN, such as the RT200 FX programme. Crude oil with decreasing production capacity continues to dominate the export earnings with a total value of N5.62trillon representing 79.16per cent of total exports as of Q1 2022. CBN is unlikely to ramp up intervention levels at the I&E window in the near term as inflows remain tepid. We project the FX reserves to deplete to $35.00 billion by the end of 2022.
