Nigeria’s foreign exchange market recorded a sharp decline in trading activity in the week ended October 2, with total turnover falling by $930.18m as transactions in the spot market contracted.
Data from the FMDQ FX Market Analysis Report showed that total turnover across the spot and derivatives segments declined by 35.41 per cent to $1.70bn from $2.63bn recorded in the previous week.
The decline came after FX trading had increased to $2.63bn in the week ended September 25, making the latest contraction a significant reversal in weekly market activity.
The spot market accounted for most of the decline, with turnover falling by 36.93 per cent, or $955.70m, to $1.63bn from $2.59bn.
Spot transactions accounted for 96.19 per cent of total FX market turnover during the week, although average daily spot trading declined to $408.06m from $517.59m in the previous week.
The decline in spot activity was partly offset by stronger trading in the derivatives market.
FX derivatives turnover increased by 65.09 per cent, or $25.52m, to $64.73m from $39.21m in the preceding week.
The derivatives segment, which comprised FX forwards during the period, increased its share of total market turnover to 3.81 per cent from 1.49 per cent.
Average daily derivatives turnover also rose to $16.18m from $7.84m.
The contrasting movement between the two segments means that while overall FX market activity declined sharply, forward transactions gained ground during the week.
FMDQ data showed that average daily turnover across the spot and derivatives markets fell to $424.24m from $525.43m in the previous week.
The latest decline comes as Nigeria’s FX market continues to adjust to changes in liquidity, currency demand and market participation following reforms aimed at improving price discovery and strengthening the functioning of the foreign exchange market.