Nigeria’s weekly foreign exchange turnover drops sharply to $1.7 billion amid reduced spot transactions

Nigeria’s foreign exchange market saw a considerable decrease in trading activity during the week ending October 2, 2026, as total turnover across the FX spot and derivatives markets fell 35.41% to $1.7 billion from $2.63 billion the previous week.

This decline was primarily caused by a $930 million drop in spot transactions, according to the latest report from FMDQ. The report compared trades between banks and their clients, revealing that average daily FX turnover decreased by 19.3%, from $525.43 million to $424.24 million.

Spot market contraction offsets growth in derivatives

While spot transactions are still the dominant force in Nigeria’s FX market, their reduction fully drove the weekly turnover decline. In contrast, FX derivatives posted strong growth, with average daily turnover increasing to $16.18 million from $7.84 million, doubling their market share to 3.81%. Despite this rise, derivatives remain a minor component, representing less than 4% of total turnover.

Central Bank of Nigeria intervention and monetary policy impact

The decrease in FX market activity took place despite a $100 million intervention by the Central Bank of Nigeria (CBN) during the week. Notably, Nigeria’s gross external reserves increased marginally by $62.17 million to $54.93 billion as of September 30, 2026. Reserves had previously grown by over $1.1 billion in September.

The sharp fall comes shortly after the CBN’s Monetary Policy Committee reduced the monetary policy rate by 350 basis points to 23% on September 22, coupled with strong liquidity tightening measures. This policy adjustment likely influenced investor behavior, contributing to the reduced demand in the spot FX market.

Implications for Nigeria’s FX market and investors

Market observers will be monitoring whether the recent decline in spot FX activity is a temporary dip or signals a broader softening in foreign exchange demand as the effects of a lower interest rate environment filter through. A critical concern for Nigeria remains whether FX inflows can be sustained given the narrowing yield advantage compared to other markets, which has historically attracted foreign portfolio investors.

For Nigerian businesses and consumers, fluctuations in the FX market directly affect currency availability and the stability of the naira. The recent decline in trading volume underscores the complexities Nigeria faces in managing foreign exchange liquidity amid evolving global and local economic conditions.