Spot transactions drove Nigeria’s foreign exchange turnover to $2.38 billion in seven days.
Data from FMDQ Exchange showed that last week’s total turnover across the FX Spot and Derivatives markets spiked by 46.27 per cent, or $754.67 million, cllosing higher than $1.631 billion recorded in the previous week.
Spot transactions require outright purchase or sale of FX for near-immediate settlement. They are used by importers, exporters, investors and banks to meet immediate payment obligations in the forex market.
The rebound was driven by activity in the spot market, indicating rising demand for immediate FX settlement, while appetite for forward contracts slowed during the week.
The average daily market turnover stood at $477.16 million, up from $326.22 million in the preceding week, showing stronger liquidity across the markets.
A breakdown of trading activity shows that the FX Spot market overwhelmingly dominated transactions during the week, accounting for virtually all market turnover.
FMDQ data showed that FX Spot transactions rose to $2.371 billion, representing 99.39 per cent of total market turnover, compared with $1.580 billion recorded in the previous week.
FX derivatives contributed only 0.61 per cent of total market turnover, down sharply from 3.14 per cent in the preceding week. As in previous weeks, the Exchange-Traded FX Futures segment remained dormant, leaving FX Forward contracts to drive total derivatives turnover.
The latest trading pattern suggests a clear shift in market preference toward immediate currency transactions rather than contracts for future delivery.
By contrast, FX derivatives—particularly forward contracts—allow counterparties to lock in an exchange rate today for settlement at a future date, helping businesses hedge against exchange rate volatility rather than source immediate foreign exchange.
The overwhelming dominance of spot transactions during the week showed that market participants were primarily focused on meeting immediate foreign currency demand, while the reduced use of forward contracts indicates softer demand for exchange-rate hedging as exchange rate stabilizes.
The shift also points to relatively improved confidence in near-term FX liquidity given improvements in Nigeria’s foreign reserves, reducing the need for businesses to secure future exchange rates through derivative instruments.
The derivatives segment continues to play a smaller but strategically important role in helping businesses manage future currency risks.