Nigeria's foreign exchange market recorded a significant weekly turnover of $2.39 billion, representing a 46% increase from the previous week, according to data released by FMDQ Securities Exchange. The surge was primarily driven by a sharp rise in FX spot transactions, which accounted for the bulk of the activity.
Spot Transactions Lead the Charge
Spot transactions, which involve the immediate exchange of currencies, jumped to $1.85 billion, up from $1.27 billion in the prior week. This represents a 45.7% increase and underscores the growing demand for immediate currency settlements in Nigeria's FX market. The FMDQ report highlighted that the increase in spot trading was the main catalyst for the overall turnover growth.
Other segments of the FX market also saw gains. FX forwards, which are contracts to exchange currency at a future date, rose to $540 million from $370 million, a 45.9% increase. Meanwhile, FX swaps, which involve simultaneous spot and forward transactions, increased marginally to $12.5 million from $10.2 million.
Market Dynamics and Implications
The surge in FX turnover reflects increased liquidity and activity in Nigeria's foreign exchange market, which has been under pressure due to dollar shortages and economic reforms. The Central Bank of Nigeria (CBN) has implemented various measures to stabilize the naira and boost FX supply, including clearing a backlog of unmet dollar demand and allowing the naira to trade more freely.
Analysts attribute the spike in spot transactions to improved confidence in the market, as well as seasonal demand from importers and businesses. "The increase in spot transactions indicates that market participants are more willing to transact at current exchange rates, which is a positive sign for liquidity," said a Lagos-based currency trader.
The total turnover of $2.39 billion is the highest weekly figure recorded in recent months, signaling a potential recovery in FX flows. However, some experts caution that sustained growth will depend on continued policy consistency and external factors such as oil prices and capital inflows.
Comparison with Previous Weeks
In the week prior, total FX turnover stood at $1.64 billion, with spot transactions at $1.27 billion. The 46% weekly increase marks a sharp reversal from the previous trend of declining volumes. Year-to-date, average weekly turnover has been around $1.8 billion, making the latest figure a notable outlier.
The FMDQ data also showed that the naira traded within a range of N1,500 to N1,550 per dollar in the spot market during the week, with the official rate closing at N1,520 per dollar on the last trading day.
Outlook
Market participants expect FX turnover to remain elevated in the coming weeks, driven by continued demand for imports and portfolio investments. The CBN's commitment to clearing the FX backlog and improving transparency in the market is likely to support further growth in spot transactions.
"If the current momentum is sustained, we could see weekly turnover surpass $3 billion in the near term," noted an economist at a leading Nigerian bank. However, risks remain, including global economic uncertainties and potential volatility in oil prices, which could impact Nigeria's FX reserves.
