FX Turnover Falls 21 Percent To $2.41bn As Market Activity Slows

• Foreign exchange turnover fell 21.38 percent week-on-week to $2.41 billion in the week ended September 4, from $3.07 billion previously.

• Spot FX transactions accounted for 97.07 percent of total activity, but declined 20.55 percent to $2.34 billion.

• FX derivatives turnover recorded a sharper 41.59 percent decline, suggesting weaker activity across both immediate and forward foreign exchange transactions.

September 07, () — Trading activity in Nigeria’s official foreign exchange market weakened significantly in the first week of September, with total turnover falling by 21.38 percent to $2.41 billion as activity declined across both spot and derivatives segments.

According to the latest market report from FMDQ Securities Exchange, total FX turnover stood at $2,414.85 million in the week ended September 4, down by $656.67 million from the $3,071.52 million recorded in the preceding week ended August 28.

The decline points to a broad-based slowdown in foreign exchange transactions at a time when the naira market continues to adjust to changing supply and demand conditions.

Spot Market Drives Decline

The spot market, which accounted for the overwhelming majority of FX transactions during the week, recorded a 20.55 percent decline in turnover.

Spot FX turnover fell to $2,344.20 million from $2,950.56 million in the previous week, representing a reduction of about $606.36 million.

The segment accounted for 97.07 percent of total FX turnover during the five-day trading period.

Average daily spot turnover also declined to $468.84 million from $737.64 million in the preceding week, indicating that the slowdown was not limited to a single trading session.

The weaker activity suggests that both corporate and institutional participants executed fewer spot transactions during the period, although the weekly figures alone do not establish whether this was driven by lower demand, reduced supply or a combination of both.

Derivatives Activity Falls Sharply

The contraction was even more pronounced in the derivatives segment, which comprises FX forwards.

Turnover in FX derivatives fell 41.59 percent to $70.65 million from $120.96 million in the previous week, representing a decline of $50.31 million.

Derivatives accounted for just 2.93 percent of total FX market turnover during the week.

Average daily turnover in the segment dropped to $14.13 million from $30.24 million previously.

The sharp decline indicates weaker activity in forward transactions, which are commonly used by market participants to manage future foreign exchange exposure and reduce the risks associated with currency movements.

Liquidity Remains A Key Market Signal

Across both segments, average daily FX turnover fell to $482.97 million during the week from $767.88 million in the preceding period.

The decline comes against the backdrop of continued efforts by the Central Bank of Nigeria to improve market liquidity, reduce distortions and support stability in the foreign exchange market.

The CBN has also maintained a relatively tight monetary policy stance, while the naira has experienced periods of renewed strength as foreign exchange supply conditions improved.

However, weekly turnover can fluctuate significantly depending on corporate import requirements, portfolio flows, foreign exchange supply, and the timing of large transactions.

The September decline therefore does not necessarily signal a deterioration in Nigeria’s overall FX position. Rather, it highlights how quickly trading activity can change as participants adjust their positions and respond to prevailing exchange-rate and liquidity conditions.

For the market, the key question will be whether the lower turnover is temporary or the beginning of a sustained reduction in FX trading activity as exchange-rate stability improves.