Trading in Nigeria’s foreign exchange market lost momentum in mid-October, with the value of dollar transactions shrinking by nearly a quarter in just one week as activity weakened across both spot and forward deals.
Figures from FMDQ show that the market recorded $2.62 billion in transactions in the week ended October 16, 2026, down from $3.37 billion a week earlier. The $749.15 million reduction represents a 22.23% decline, reversing some of the surge recorded in the preceding week.
The downturn was particularly severe in the forward market, where transaction volumes fell by more than four-fifths. Spot deals, however, accounted for most of the overall drop because they represent the bulk of Nigeria’s reported FX trading.
Forward market loses ground sharply
Forward transactions fell from $131.95 million to $24.89 million during the review period, an 81.14% contraction. Their share of total market activity consequently dropped from 3.92% to just 0.95%.
Forward contracts allow businesses to lock in an exchange rate for a currency transaction that will take place later. For a Nigerian importer expecting to pay a foreign supplier in three months, for example, such an agreement can help limit uncertainty about the naira cost of the payment.
Average daily turnover in this segment plunged from $26.39 million to $4.98 million.
The latest movement follows a series of sharp changes in forward trading. Turnover was $64.73 million in the week ended October 2, climbed to $131.95 million the following week and then fell to $24.89 million.
These figures measure transactions completed during each week. They do not indicate that the market’s outstanding forward contracts declined by the same amount.
Spot deals drive the wider market downturn
The larger spot market also recorded weaker activity. Transactions fell by $642.09 million, or 19.83%, from $3.24 billion to $2.60 billion.
Spot deals involve currency exchanges for near-immediate delivery. Their continued dominance means changes in this segment have a much greater influence on overall turnover than movements in forward contracts.
During the week, spot transactions represented 99.05% of all reported FX trading, compared with 96.08% previously. Average daily spot turnover declined from $647.58 million to $519.16 million.
The market’s average daily turnover also dropped from $673.97 million to $524.14 million.
In absolute terms, spot trading accounted for approximately 85.7% of the weekly decline, while forward deals contributed the remaining 14.3%. Although forward activity suffered a steeper percentage fall, its smaller market share limited its contribution to the total reduction.
Spot turnover was about 104 times forward turnover in the latest week, compared with approximately 24.5 times in the preceding period.
Trading remains stronger than at the start of October
The latest contraction does not erase the recovery recorded earlier in the month. Turnover in the week ended October 2 stood at $1.70 billion after falling 35.41%, before almost doubling to $3.37 billion in the week ended October 9.
At $2.62 billion, the latest figure remains $923.73 million above the October 2 total, an increase of 54.43%.
However, the weeks did not have equal trading days. October 2 had four trading days, while the October 9 and October 16 periods each had five. Comparing average daily activity gives a more balanced picture: the latest daily turnover was around 23.5% above the October 2 average of $424.24 million.
The market has experienced similar volatility in recent months. Turnover reached $3.39 billion in the week ended September 11, when forward transactions jumped by 505.79%.
Forward rates improve as spot naira weakens
Lower forward trading volumes coincided with gains for the naira across several forward contract maturities, according to a Cordros Securities report.
The currency strengthened by one basis point in one-month contracts to ₦1,352.89 per dollar, eight basis points in three-month contracts to ₦1,370.80, 22 basis points in six-month contracts to ₦1,436.75 and 65 basis points in one-year contracts to ₦1,531.01.
The spot market moved in the opposite direction. The naira weakened by 0.1% week-on-week to ₦1,333.09 per dollar, as renewed domestic demand outweighed the effect of the Central Bank of Nigeria’s $430.60 million intervention during the week.
Pressure from currency demand remains a concern. An analysis of FMDQ data published by Nairametrics showed that FX demand reached $18.34 billion in the second quarter of 2026, its highest level in 15 years, with services and financial payments contributing to the demand.
Cordros Securities expects the naira to remain broadly stable in the near term, citing Nigeria’s foreign reserves and current account surplus as supportive factors. It nevertheless warned that lower domestic yields and tighter global financial conditions could threaten that outlook.
The latest figures point to a market marked by sharp weekly swings rather than a steady direction, with spot transactions continuing to dominate while forward activity remains highly volatile.
Source: Nairametrics