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.
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.
Kanyi Daily reports that 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.
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 $54.93 billion as of September 30, 2026. In the forwards market, the naira weakened slightly in the 1-month contract, down 9 basis points to ₦1,350.62/$. The local currency strengthened across the longer tenors: up 4 basis points to ₦1,385.61/$ in the 3-month; up 28 basis points to ₦1,434.30/$ in the 6-month, and up 78 basis points to ₦1,529.80/$ 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 $53.806 billion at the end of August, even as the naira gained ₦3.78 at the official window to close the month at ₦1,329.16/$.
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 ₦17.5 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. 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.
