2020 FINANCIAL MARKETS DEPARTMENT HALF YEAR ACTIVITY REPORT

CENTRAL BANK OF NIGERIA

FINANCIAL MARKETS DEPARTMENT

Half-Year Activity Report

2020

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Table of Contents

FOREWORD ..................................................................................................................................... IX

PREFACE ........................................................................................................................................... X

• 1.0 OVERVIEW ............................................................................................................................. 11

• 1.1 Global Economy ....................................................................................................................... 11

• 1.2 Domestic Economy ................................................................................................................... 13

• 1.3 Monetary Policy ....................................................................................................................... 14

• 1.4 Nigerian Financial Markets Operations .................................................................................... 15

  • 1.4.1 Money Market ................................................................................................................. 15

  • 1.4.2 Foreign Exchange Market ............................................................................................... 15

  • 1.4.3 Capital Market Developments ......................................................................................... 16

  • 1.4.4 Federal Government Domestic Debt ............................................................................... 17

  • 1.4.5 Activities of Internal and Inter-Agency Committees ...................................................... 18

  • 1.4.6 Other Developments in the Nigerian Financial Markets ................................................. 18

  • 1.4.7 Guidelines and Circulars ................................................................................................. 18

• 2.0 DOMESTIC MONEY MARKET OPERATIONS .................................................................. 19

• 2.1 Liquidity Management ............................................................................................................. 19

  • 2.1.1 Open Market Operations ................................................................................................. 20

  • 2.1.2 Discount Window Operations ......................................................................................... 22

• 2.2 Inter-bank Funds Market .......................................................................................................... 24

• 2.3 Interest Rates Movement .......................................................................................................... 25

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• 2.5 One-Way Secondary Market Intervention ................................................................................ 27

• 3.0 FOREIGN EXCHANGE MARKET OPERATIONS .............................................................. 28

• 3.1 Developments in the Foreign Exchange Market ...................................................................... 28

• 3.2 Inter-bank Foreign Exchange Market ....................................................................................... 28

• 3.3 Naira-Settled Over the Counter Foreign Exchange Futures ..................................................... 30

• 3.4 The Bilateral Currency Swap Agreement ................................................................................. 31

• 3.5 Investors and Exporters Window ............................................................................................. 31

• 3.6 Bureau-de-Change .................................................................................................................... 32

• 3.7 Interbank Foreign Exchange Rate ............................................................................................ 32

• 3.8 Foreign Exchange Rate Premium ............................................................................................. 34

• 4.0 CAPITAL MARKET DEVELOPMENTS ............................................................................... 37

• 4.1 Nigerian Stock Market .............................................................................................................. 37

  • 4.1.1 All Share Index and Market Capitalization ..................................................................... 38

  • 4.1.2 Market Turnover ............................................................................................................. 39

• 4.2 New and Supplementary Listings and Delisting ...................................................................... 40

• 4.3 New Developments in the Capital Market ............................................................................... 40

4.3.1 The Implications of the Finance Act 2019 on the Nigerian Capital Market ................... 40

4.3.2 The Launch of the NSE Growth Board ........................................................................... 41

4.3.3 NG Clear- Central Clearing Counter-Party ..................................................................... 41

• 5.0 FEDERAL GOVERNMENT DOMESTIC DEBT .................................................................. 43

• 5.1 Nigerian Treasury Bills ............................................................................................................ 43

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5.1.1

Structure of Outstanding Nigerian Treasury Bills Holdings ........................................... 45

• 5.2 Federal Republic of Nigeria Treasury Bonds ........................................................................... 45

• 5.3 Federal Government of Nigeria Bonds ..................................................................................... 46

• 5.4 Domestic Debt Charge .............................................................................................................. 47

• 5.5 Over-the-Counter Transactions ................................................................................................ 47

  • 5.5.1 Over-the-Counter Transactions in Nigerian Treasury Bills ............................................ 47

  • 5.5.2 Over-the-Counter Transactions in Federal Government of Nigeria Bonds .................... 48

• 5.6 Asset Management Corporation of Nigeria Bonds ................................................................... 48

• 5.7 Federal Government of Nigeria Savings Bonds ....................................................................... 48

• 5.8 Federal Government of Nigeria Green Bonds .......................................................................... 49

• 5.9 Federal Government of Nigeria Sukuk ..................................................................................... 49

• 5.10 Federal Government of Nigeria Promissory Notes .............................................................. 49

• 6.0 ACTIVITIES OF INTERNAL AND INTER-AGENCY COMMITTEES .............................. 50

• 6.1 Liquidity Assessment Group .................................................................................................... 50

• 6.2 The Non-Interest Financial Institutions Products Development Committee ............................ 50

• 6.3 Fiscal Liquidity Assessment Committee .................................................................................. 51

• 6.4 Financial Regulation Advisory Council of Experts .................................................................. 51

• 7.0 MAJOR DEVELOPMENTS IN THE NIGERIAN FINANCIAL MARKETS ....................... 52

• 7.1 Expansion of the Scope of Regional Banks .............................................................................. 52

• 7.2 CBN Rule Book ........................................................................................................................ 53

• 7.3 Extension of Deadlines for the Recapitalisation of Microfinance Banks and Insurance Companies 53

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