By Chinwendu Obienyi
Nigeria’s foreign exchange (FX) market recorded a slight increase in overall trading activity last week, as total turnover across the FX Spot and Derivatives markets reached $1.76 billion.
This represents a 0.38 per cent week-on-week (w/w) increase from $1.75 billion reported in the previous week ending May 9, 2025, according to data from FMDQ Exchange.
The increase in total FX turnover was primarily driven by modest gains in the Spot FX segment, which remains the dominant avenue for currency trading in the Nigerian market.
Specifically, spot FX turnover rose by 0.45 per cent or $7.79 million to close the week at $1.76 billion, up from $1.75 billion recorded the week before.
In contrast, activity in the FX Derivatives market saw a significant decline, falling by 80.67 per cent or $1.21 million to $0.29 million during the review period.
The drop was entirely attributed to the slump in FX Forwards turnover, which mirrored the total derivatives decline.
Notably, the Exchange-Traded FX Futures and the Cleared Naira-Settled Non-Deliverable Forwards (NSNDF) segments remained dormant, continuing a pattern of inactivity seen in recent months.
Market analysts say the data reflects persistent caution among market participants amid lingering uncertainty around FX policy reforms, volatility in Naira valuation, and limited supply-side confidence.
According to them, the minimal increase in Spot FX transactions may signal slight improvements in liquidity or client demand, but the sharp decline in derivative products suggests that hedging appetite remains subdued.
“The persistent inactivity in the futures and non-deliverable forwards markets indicates a general lack of confidence in longer-term FX pricing or expectations of further policy adjustments,” one analyst familiar with the market noted.
While the Central Bank of Nigeria (CBN) has taken several steps in recent months to liberalize the FX market and enhance price discovery such as harmonizing official and parallel market rates and reducing administrative barriers, foreign exchange volatility remains a key concern for businesses and investors alike.
Market participants continue to monitor developments in Nigeria’s broader macroeconomic landscape, including inflation trends, external reserves, and oil export performance, all of which bear significant implications for FX stability and investor sentiment.
With the second quarter of 2025 already progressing, all eyes remain on the CBN’s next moves to ensure a more stable, liquid, and transparent FX market environment.