Nigeria's foreign exchange market experienced a significant rebound in trading activity during the week ended September 25. According to market data released by FMDQ Group, total weekly turnover increased by $260.85m to $2.63bn. This represents an 11.02% rise from $2.37bn recorded in the previous week. The recovery comes after a sharp contraction in the preceding week, when total FX turnover fell by about 30% from nearly $3.4bn to $2.37bn.
The increase in trading activity was largely driven by the FX Spot market, which accounts for the overwhelming majority of trading activity on the official market. Spot turnover rose 10.62% week-on-week, increasing by $248.42m from $2.34bn to $2.59bn. This pushed average daily spot turnover to $517.59m from $467.90m in the preceding week. Spot transactions accounted for 98.51% of total FX market turnover during the week.
The recovery in spot activity points to stronger trading volumes between authorised dealers and their clients during the week. This follows the decline recorded in the previous reporting period. The spot market continues to dominate the FX market, with forward and other derivatives transactions playing a relatively minor role.
In addition to the spot market, FX derivatives also recorded a significant percentage increase during the week. Turnover in the segment rose 46.42% to $39.21m from $26.78m in the previous week. This represents an increase of $12.43m. The increase lifted average daily derivatives turnover to $7.84m from $5.36m.
Despite the recovery in derivatives, the segment remains a relatively small part of overall FX trading compared with the spot market. Across both segments, average daily FX turnover increased to $525.43m from $473.26m in the previous week. The latest figures indicate a renewed increase in activity in Nigeria's official FX market.
The rebound in Nigeria's FX market is a positive development for the country's economy. The increase in trading activity suggests that the market is recovering from the sharp contraction recorded in the previous week. The dominance of the spot market in FX trading activity is also a notable trend.
The FX market's performance has implications for Nigeria's economic stability and growth. A stable and active FX market is essential for facilitating international trade and investment. The Central Bank of Nigeria and other regulatory bodies will likely be monitoring the market's performance closely to ensure that the rebound is sustained.
Key points
- Nigeria's foreign exchange market recorded an 11.02% rebound in trading activity to $2.63bn in the week ended September 25.
- The rebound was driven largely by the FX Spot market, which accounts for the overwhelming majority of trading activity on the official market.
- Average daily FX turnover increased to $525.43m from $473.26m in the previous week.
