FMDQ’s weekly FX turnover falls 35.4% to $1.7 billion as spot transactions drop $956 million

Nigeria’s foreign exchange market recorded a sharp pullback in trading activity in the week ended October 2, 2026, with total turnover across the FX Spot and Derivatives markets falling 35.41% to $1,696.97 million from $2.63 billion the previous week.

Nairametrics analysis of the latest FMDQ FX Market Report published on Sunday, October 4, shows that the sharp decline was driven entirely by a $930.18 million collapse in spot transactions as of the close of business on Friday, October 2.

The report, which compares trades between banks (FMDQ Dealing Member Banks/Authorised Dealers) and their clients showed that average daily FX turnover fell to $424.24 million from $525.43 million, a decline of about 19.3%.

The pullback marks a sharp reversal from the gradual recovery seen in the two preceding weeks, and comes as the naira faced renewed FX demand at the official market that outweighed the impact of a $100 million CBN intervention.

$955.70 million plunge in Spot turnover outweighs 65% growth in Derivatives

FX Spot transactions, which remained dominant, accounted for the entirety of the week’s decline, even as FX Derivatives posted strong growth from a small base.

• FX Spot turnover fell 36.93% to $1.632 billion from $2.588 billion, a decline of $955.70 million — larger than the overall market decline, since derivatives growth partly offset the spot-market contraction.
• Average daily Spot turnover fell to $408.06 million from $517.59 million.
• Spot’s share of total turnover declined to 96.19% from 98.51%, a drop of 2.32 percentage points.
• FX Derivatives, comprising FX Forwards, rose 65.09% to $64.73 million from $39.21 million, an increase of $25.52 million.

Average daily Derivatives turnover rose to $16.18 million from $7.84 million, lifting its share of total turnover to 3.81% from 1.49%.

Despite more than doubling its market share, FX Derivatives remained a small fraction of overall activity — for every $100 of FX turnover during the week, approximately $96.19 came from spot transactions and only $3.81 from derivatives.

FX demand outweighs CBN’s $100 million intervention:

At the money market, renewed FX demand outweighed the impact of the CBN’s $100 million intervention during the week, even as gross external reserves rose by $62.17 million to $54.93 billion as of September 30, 2026.

• In the forwards market, the naira weakened slightly in the 1-month contract, down 9 basis points to N1,350.62/$.
• The local currency strengthened across the longer tenors: up 4 basis points to N1,385.61/$ in the 3-month;
• Up 28 basis points to N1,434.30/$ in the 6-month, and up 78 basis points to N1,529.80/$ in the 1-year contract.
• Analysts at Cordros Capital said the pattern suggests the market’s longer-term Naira outlook remains more constructive than its near-term positioning.

The intervention and reserve build-up follow a broader pattern through September, when Nigeria’s gross external reserves climbed by $1.114 billion over the month to $54.920 billion from $53.806 billion at the end of August, even as the naira gained N3.78 at the official window to close the month at N1,329.16/$.

Nairametrics reported in September that CBN Governor Olayemi Cardoso had previously dismissed claims that the apex bank was aggressively intervening to defend the naira, noting that CBN interventions accounted for only about 1.2% to 1.3% of total FX turnover — a scale consistent with the $100 million intervention recorded this week against total weekly turnover of $1.697 billion.

Lower rates test investor appetite as CBN tightens liquidity

The sharp decline in weekly FX turnover came after the CBN’s Monetary Policy Committee (MPC) cut the monetary policy rate (MPR) by 350 basis points to 23% on September 22, accompanied by aggressive liquidity mop-up that kept monetary conditions tight.

• The CBN allotted approximately N17.5 trillion in OMO bills across five auctions in September 2026 alone, as it sought to restrain excess naira.
• Nairametrics’ analysis of the CBN’s post-rate-cut policy stance showed that lower rates could gradually weaken the appeal of high-yielding Nigerian instruments to foreign investors.
• Falling real yields could also slow the “hot money” inflows that have supported FX liquidity. This could become significant for the foreign exchange market because foreign portfolio inflows have remained an important source of FX supply.

With FX Derivatives turnover still a small fraction of overall market activity despite its 65% weekly jump, market watchers will be looking to see whether this week’s spot-market pullback reflects a temporary lull or the start of softer demand as the lower-rate environment works its way through investor positioning in the coming weeks. The key question is whether Nigeria can sustain strong FX inflows as the yield advantage that attracted foreign portfolio investors begins to narrow.