NEWS
Naira Holds Near ₦1,350 After Dollar Trading Halves in One Week
Naira Holds Near ₦1,350 After Dollar Trading Halves in One Week
Foreign-exchange turnover fell 51.29% to $1.81 billion in the week ended November 6, down from $3.71 billion.
Spot transactions accounted for 97.3% of the $1.90 billion reduction, while forward trading fell nearly 70%.
The naira weakened only marginally, closing around ₦1,349 last Friday and ₦1,350 on Monday.
Separate October data show stronger FX inflows, largely supported by the CBN, despite a reported $1.41 billion net foreign outflow.
November 10, () – Nigeria’s naira has maintained a relatively narrow trading range even as the value of dollar transactions in the country’s foreign-exchange market has fallen by more than half in one week.
Figures published by FMDQ Securities Exchange show that spot and forward transactions between authorised dealers and their customers declined from $3.71 billion in the week ended October 30 to $1.81 billion in the week ended November 6, a reduction of approximately $1.90 billion.
Average daily turnover dropped from $742.51 million to $361.67 million, while the naira closed Friday around ₦1,349 per dollar. By Monday, November 9, the currency had weakened only slightly to approximately ₦1,350 at the official market.
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Such a large decline in transactions alongside a relatively stable exchange rate raises an important issue for businesses and investors. How much can the naira’s price tell them about market conditions when significantly fewer dollars are changing hands?
Trading volume does not measure dollar availability directly. A decline may reflect reduced demand, lower supply, fewer large transactions or a combination of these factors. FMDQ’s weekly report establishes the scale of the slowdown, although it does not identify the precise reasons behind it.
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That leaves the quality of the market’s liquidity, rather than the exchange-rate quotation alone, deserving closer attention.
FX trading Photo credit Shutterstock
Where the $1.90bn Decline Came From
Spot transactions, which involve the immediate or near-immediate exchange of currencies, accounted for nearly the entire reduction in trading activity.
FMDQ recorded $1.79 billion in spot deals during the week, compared with $3.64 billion previously. The $1.85 billion decline represented approximately 97.3% of the overall fall in turnover.
Spot transactions also accounted for 98.77% of all reported foreign-exchange trading, confirming their dominance in the market.
Activity in forward contracts weakened more sharply in percentage terms. Transactions involving agreed currency exchanges at future dates fell 69.93%, from $73.83 million to $22.20 million.
Despite that substantial decline, forwards represented only 1.23% of weekly turnover, meaning their contribution to the overall contraction was relatively small.
These figures concern newly executed transactions, not the value of outstanding forward contracts or Nigeria’s total foreign-currency obligations.
More importantly, $1.90 billion in reduced turnover should not be interpreted as $1.90 billion in dollars leaving Nigeria or disappearing from the financial system. Trading turnover records completed transactions, and a dollar can feature in more than one transaction during a reporting period.
Nor does a quieter market automatically indicate weaker foreign-exchange demand.
Importers may delay purchases, foreign investors may reduce transactions, or businesses may complete fewer large settlements. Reduced dollar supply could also restrict trading activity.
Without more detailed information about customer orders, dealer quotations and the composition of transactions, assigning the decline to any one cause would amount to speculation.
FMDQ’s figures establish that the market was considerably less active. They do not establish that buyers could obtain dollars more easily or that banks were unable to meet legitimate requests.
October’s Dollar Inflows Complicate the Picture
Separate figures reported on Tuesday indicate that foreign-exchange inflows into Nigeria’s official market increased to $8.28 billion in October, compared with $5.12 billion in September.
According to the Financial Markets Dealers data cited in the report, domestic sources supplied $5.11 billion, representing approximately 61.7% of the month’s total inflows.
Supply attributed to the Central Bank of Nigeria increased 421.7% from September, while foreign inflows rose a comparatively modest 3.5% to $3.17 billion.
The report also recorded net foreign outflows of $1.41 billion in October, reversing September’s $1.03 billion net inflow.
October’s monthly inflows and November’s weekly turnover measure different activities over different periods. They cannot be compared directly to conclude that dollar liquidity improved or deteriorated by a particular percentage.
They do, however, bring another consideration into the assessment of Nigeria’s foreign-exchange market.
A stronger monthly inflow figure can coexist with slower subsequent trading, especially when a significant portion of supply comes from the central bank rather than independent commercial sources.
CBN participation may help meet demand and reduce volatility, but the sustainability of currency-market stability also depends on export receipts, investment inflows, remittances and the willingness of private market participants to transact.
During the week ended November 6, market commentary reported a further $50 million CBN intervention. Analysts at Cordros Securities nevertheless expect the naira to remain broadly stable in the near term, supported by external reserves and Nigeria’s current-account position.
Their assessment remains sensitive to developments in domestic interest rates, international financial conditions and foreign portfolio flows.
Higher returns on Nigerian securities can attract foreign investors who exchange dollars for naira to purchase local assets. Changes in those returns or global risk appetite may influence how much capital enters or leaves the market.
The recent figures make it particularly important to establish how much of Nigeria’s foreign-exchange activity relies on private transactions and how much support the central bank continues to provide.
The Central Bank of Nigerias headquarters in Abuja Source GodwinPaya Wikimedia Commons
What a Stable Exchange Rate Can Miss
A relatively steady official rate offers some certainty to businesses preparing budgets, pricing imports or managing foreign-currency obligations.
However, the practical experience of obtaining foreign exchange also depends on transaction costs, execution time, available volumes and the difference between the rates dealers offer to buy and sell dollars.
A business requiring a substantial dollar payment may face different conditions from an investor making a smaller transaction.
Consequently, the most useful test of market liquidity is not simply whether the naira closes near the same level each day. It is whether participants can complete transactions of reasonable size without significant delays or adverse price movements.
Nigeria’s forward market offers another measure worth following.
At the end of last week, the one-month forward rate stood at approximately ₦1,370.19 per dollar, while the three-month, six-month and one-year rates were quoted around ₦1,405.78, ₦1,455.88 and ₦1,557.65, respectively.
All four tenors weakened during the week, with the one-year rate recording the largest percentage movement.
Forward rates reflect factors including interest-rate differences, financing costs and the market’s pricing of future currency delivery. They should not be treated as straightforward predictions of where the naira will trade on those dates.
Still, their movements provide information beyond the daily spot quotation, particularly for businesses trying to manage the cost of future dollar payments.
Investors must also consider the uneven pattern of recent turnover.
A one-week fall, however sharp, cannot establish a permanent deterioration in foreign-exchange liquidity. Nigeria has experienced considerable variation in trading volumes throughout 2026, making the next several reporting periods important for establishing a more durable trend.
Further evidence should come from the number and size of transactions, the persistence of dollar inflows, the pattern of central-bank interventions and the relationship between official and parallel-market exchange rates.
Businesses will be particularly interested in whether lower turnover affects their ability to source foreign currency at executable prices.
Nigeria has made progress towards greater exchange-rate stability, but the latest figures show why judging the market by the naira’s daily movement alone can leave out important information.
A currency market needs more than a steady price. Businesses and investors also need sufficient trading activity, reliable access to foreign exchange and confidence that those conditions can continue without exceptional intervention.
How those measures develop over the coming weeks will offer a more complete assessment of the naira’s resilience than a single closing rate.
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