FX futures contracts gain ground on naira weakness

As the naira weakened further against the dollar this week, more users of foreign exchange turned to futures contracts as the value of transactions rose by over a quarter, data from FMDQ Group, a securities exchange, show.

FX futures contracts worth $462.39 million were traded in 36 deals this week, representing an increase of 25.91 percent when compared to the $367.25 million FX Futures contracts traded in 31 deals recorded last week.

The naira depreciated by 0.34 percent against the dollar as the average Nigerian Autonomous Foreign Exchange Fixing rate was ₦464.90 per dollar, compared to ₦463.34/$ last week.

The total turnover in the FX spot and derivatives markets increased by 3.65 percent to $1.11 billion from $1.07 billion last week.

FMDQ said the increase in total turnover “was solely driven by the 43.47 percent ($162.35 million) increase in FX derivatives turnover, offsetting the 17.72 percent ($123.28 million) decrease in FX spot turnover”. 

It said the increase in FX derivatives turnover was jointly driven by the 1,082.29 percent ($67.21 million) and 25.91 percent ($95.14 million) increases in FX forwards and FX futures turnover, respectively.

“In the FX Spot market, the total value of transactions for the week-ended May 19, 2023, was $572.49 million, representing a decrease of 17.72 percent ($123.28 million) from the value of transactions executed in the week-ended May 12, 2023 ($695.77million),” it added.

Leave a Reply

Your email address will not be published. Required fields are marked *