Nigeria’s Weekly Dollar Trading Nearly Doubles to $3.37bn on Stronger Spot Transactions

Trading in Nigeria’s foreign exchange market nearly doubled to $3.37 billion in the week ended October 9, 2026, from $1.70 billion recorded in the preceding week, reflecting a sharp rebound in market activity driven largely by spot transactions.

Data from FMDQ Securities Exchange showed that total foreign exchange turnover increased by 98.58 per cent during the review period, representing an additional $1.67 billion in transactions involving authorised dealers and their customers.

The recovery followed a 35.41 per cent decline in foreign exchange turnover in the week ended October 2, when total transactions fell to $1.70 billion amid a significant drop in spot market activity.

The latest figures indicate that trading activity has returned to levels recorded in September, when weekly foreign exchange turnover reached approximately $3.39 billion in the week ended September 11.

However, the increase in trading volumes does not necessarily indicate improved dollar availability or a stronger naira, as market liquidity also depends on the consistency of foreign currency inflows and the demand for dollars.

Spot transactions accounted for the bulk of the latest recovery, rising by 98.37 per cent to $3.24 billion from $1.63 billion in the previous week.

The increase of approximately $1.61 billion in spot transactions represented about 96 per cent of the total growth in foreign exchange turnover during the period.

Spot transactions involve the purchase and sale of foreign currencies at prevailing exchange rates for near-immediate delivery. They are commonly used by banks, businesses, investors and other market participants to meet their foreign currency obligations.

For Nigerian businesses that depend on imported raw materials, machinery, equipment and finished products, activity in the spot market is particularly important because it provides a channel for obtaining dollars to settle payments to overseas suppliers.

The FMDQ figures also showed an increase in average daily foreign exchange turnover to $673.97 million from $424.24 million in the preceding week, pointing to stronger trading activity during the reporting period.

Beyond the spot market, foreign exchange forward transactions also recorded significant growth, more than doubling to $131.95 million from $64.73 million.

The increase of approximately $67.22 million represented a 103.85 per cent rise in forward transactions during the week.

Despite the strong growth, forward transactions accounted for only 3.92 per cent of total foreign exchange turnover, while spot transactions represented the remaining 96.08 per cent.

Forward contracts allow businesses and investors to agree on an exchange rate for a currency transaction to be completed at a future date. The arrangement can help businesses manage exchange rate uncertainty when planning payments for imports and other foreign currency obligations.

For instance, a Nigerian company expecting to pay a foreign supplier in three months can enter into a forward contract to establish the exchange rate applicable to the future payment, thereby reducing uncertainty over its naira costs.

The increase in forward transactions, however, does not by itself establish that more businesses are actively hedging their foreign exchange exposure, as the available figures do not specify the purpose of individual transactions.

The latest recovery highlights the volatility in Nigeria’s foreign exchange market in recent weeks. After reaching $3.39 billion in the week ended September 11, turnover declined before falling to approximately $1.70 billion in the week ended October 2.

The subsequent rebound to $3.37 billion suggests that trading activity has recovered substantially from the previous week’s level, although the sustainability of the improvement will depend on underlying market conditions.

Analysts have continued to emphasise the importance of foreign currency inflows from exporters, foreign portfolio investors, diaspora remittances and foreign direct investment in supporting liquidity in the market.

In its weekly economic and market report covering the week ended October 9, 2026, Cordros Securities identified the resilience of foreign portfolio participation and the recovery of domestic foreign exchange inflows as important factors that could shape the near-term outlook.

The investment firm noted that domestic inflows from the Central Bank of Nigeria, individuals, non-bank corporates and exporters and importers are among the sources relevant to developments in the foreign exchange market.

It also cautioned that lower domestic yields and persistent geopolitical tensions could weaken the relative attractiveness of naira-denominated assets to foreign investors, potentially reducing portfolio inflows and putting pressure on foreign exchange liquidity.

Providing further insight into the market, the Head of Research at GTI Securities Limited, Mr. Abiodun Ogunniyi, said the sharp recovery in turnover could reflect renewed activity by exporters, foreign portfolio investors, offshore investors repatriating funds and other participants supplying dollars through authorised dealers.

He stressed that the composition of foreign currency supply would be important in determining whether the improvement could be sustained.

According to Ogunniyi, export proceeds, foreign portfolio investments, diaspora remittances and foreign direct investments can all contribute to foreign currency supply, although they enter the market through different channels.

He explained that sustained inflows could improve transactions between buyers and sellers, but warned that the durability of the recovery would depend on whether the increase reflected consistent foreign currency supply rather than temporary portfolio movements or isolated transactions.

For businesses and investors, the distinction between higher turnover and improved dollar availability remains critical. Increased trading volumes indicate that more transactions have been recorded, but they do not automatically translate into lower exchange rates, reduced import costs or greater stability in the naira.

The outlook for Nigeria’s foreign exchange market will therefore depend on the sustainability of the latest increase in turnover, the strength of domestic and foreign inflows, demand for dollars and broader economic and geopolitical developments.

Whether the rebound will translate into more consistent access to foreign currency for businesses and investors remains a key question for the market in the coming weeks.