Nigeria’s FX Market Turnover Rises 11% to $2.63bn as Spot Trading Rebounds
Nigeria’s foreign exchange market recorded a strong recovery in trading activity in the week ended September 25, with combined turnover across the spot and derivatives segments rising by 11.02% to $2.63 billion.
The latest figures from the FMDQ FX Market Report showed that total turnover increased by $260.85 million, from $2.37 billion recorded in the preceding week.
Average daily turnover also increased to $525.43 million, compared with $473.26 million in the previous week, representing an 11% increase.
The recovery was largely driven by stronger activity in the spot market, which remains the dominant component of Nigeria’s foreign exchange market.
Spot transactions increased by 10.62% to $2.59 billion, from $2.34 billion in the previous week. The increase accounted for approximately 95% of the total weekly growth in FX turnover.
Average daily spot turnover similarly increased to $517.59 million from $467.90 million.
Trading in the derivatives segment also increased, although from a significantly smaller base. FX derivatives turnover rose by 46.42% to $39.21 million, compared with $26.78 million in the previous week.
Despite the increase, derivatives accounted for only 1.49% of total FX turnover, while spot transactions represented 98.51%.
The latest data also showed that activity in forward contracts remains substantially below the levels recorded earlier in September. FX forward turnover stood at $39.21 million during the latest week, compared with $427.99 million in the week ended September 11.
That earlier surge in forward trading had pushed total FX turnover to $3.39 billion.
The relatively small share of derivatives means that Nigeria’s FX market remains heavily concentrated in transactions for immediate delivery rather than instruments used by businesses to hedge future currency exposure.
Meanwhile, the naira remained relatively stable around the N1,330/$ level during the week, supported by stronger foreign-exchange liquidity and an improvement in the country’s external reserves.
Nigeria’s external reserves stood at $54.86 billion as of September 24, after rising by $9.29 billion since the beginning of the year. The latest reserve position is more than $3.8 billion above the CBN’s projected year-end level of $51.04 billion.
The FX market activity also followed the Central Bank of Nigeria’s decision to cut its Monetary Policy Rate by 350 basis points to 23% at its September 22 policy meeting.
The rate reduction came as headline inflation stood at 15.39% in August, according to the latest official inflation data referenced in the market reports.
The combination of improved reserves, relatively stable exchange rates and increased spot-market activity will remain important indicators for businesses that depend heavily on imported inputs, foreign-currency obligations and international trade.
