Nigeria’s foreign-exchange (FX) market traded about $2.63 billion in the week ended 25 September 2026.
That number sounds like evidence of a market returning to health.
It may be part of that story, but it is not enough to prove it.
FMDQ market data reviewed by Nairametrics showed total turnover across foreign-exchange spot and derivatives transactions rising about 11 per cent from the previous week, from roughly $2.37 billion to $2.63 billion. Spot transactions accounted for about 98.5 per cent of the total.
The increase matters because a functioning currency market needs buyers and sellers willing to transact.
But confidence in a currency is not measured by turnover alone.
A market can record high volume because investors are entering. It can also record high volume because investors are leaving. A currency can trade actively while weakening sharply. One week can be unusually busy because of a few large transactions.
The more useful question is whether Nigeria’s FX market is becoming deeper, more predictable and easier for legitimate users to access.
Turnover measures activity, not direction
Foreign-exchange turnover is the value of transactions completed during a period.
If a Nigerian company buys $10 million from a bank to pay for machinery, that adds to turnover.
If a foreign investor sells naira securities and converts the proceeds into dollars, that also adds to turnover.
One transaction may reflect confidence in Nigeria. The other may reflect an exit.
This is why volume should never be interpreted in isolation.
Analysts need to look at the exchange rate, spreads, reserves, capital flows, forward pricing and the balance between demand and supply.
The $2.63 billion figure tells us the market was active.
It does not tell us, by itself, why.
The increase was also a rebound from a weak previous week
Context matters.
The previous week, turnover had fallen to about $2.37 billion from roughly $3.39 billion the week before that.
The 11 per cent increase therefore followed a sizeable decline.
That volatility is a reminder not to build a national currency narrative around one weekly report.
A more reliable view would examine monthly and quarterly trends.
Is average daily turnover rising over several months?
Are more institutions participating?
Are transaction sizes broadening?
Can companies access foreign exchange when they need it?
Those patterns matter more than a single rebound.
A deeper FX market reduces the power of individual transactions
Imagine a market where only $50 million trades on an average day.
One company needing $20 million can move the price significantly.
Now imagine a market where several billion dollars trade daily across many buyers and sellers.
The same $20 million order becomes easier to absorb.
That is market depth.
A deep FX market makes the exchange rate less vulnerable to individual transactions or temporary shocks.
Nigeria’s challenge for years has been that legitimate demand for dollars often exceeded transparent supply at the prevailing official price. This encouraged backlogs, rationing, multiple rates and movement into parallel markets.
Higher sustainable turnover can reduce those distortions.
The spot market still dominates
The reported week showed spot transactions accounting for almost all turnover.
A spot trade is essentially a transaction for near-immediate exchange.
A mature foreign-exchange market also needs active derivatives, including forwards.
A forward contract allows a business to agree today on the exchange rate for a transaction that will occur in the future.
Consider a Nigerian manufacturer that must pay $1 million for equipment in three months.
Without a hedge, the company has no certainty about how many naira it will need when payment is due.
With a functioning forward market, it can lock in or manage that currency risk.
This improves business planning.
The relatively small share of derivatives in the weekly turnover does not mean Nigeria has no forward market. It does show why policymakers should pay attention to its depth.
Currency stability is valuable because businesses hate uncertainty
A company can operate with an exchange rate of ₦1,300 or ₦1,500 if it can plan around it.
What is far more damaging is not knowing whether the rate will move hundreds of naira within a short period while access to dollars is also uncertain.
Businesses respond by increasing prices defensively, holding more cash in foreign currency or delaying investment.
A more normal FX market should therefore deliver two things: price discovery and access.
Price discovery means the exchange rate reflects real supply and demand rather than an administratively chosen number.
Access means a business willing to pay the market rate can actually obtain foreign currency through formal channels.
Nigeria needs both.
The official and parallel markets should remain close
One indicator of market normalisation is the gap between official and parallel exchange rates.
A large gap creates arbitrage.
Someone who obtains dollars cheaply in the official market has an incentive to resell them elsewhere. Exporters may avoid formal channels. Remittances may move outside the banking system.
When rates converge, those incentives weaken.
The objective should not be to eliminate informal currency trading by force.
It should be to make the formal market liquid and credible enough that businesses and households prefer to use it.
Enforcement can address illegal activity, but liquidity is what makes a market attractive.
Foreign reserves provide confidence, but intervention is not a permanent solution
Central-bank reserves matter because they give a country capacity to meet external obligations and respond to periods of market stress.
Stronger reserves can therefore improve confidence in the naira.
But a central bank can also create the appearance of stability by selling large amounts of dollars into the market.
That can be useful during temporary disruption. It cannot substitute permanently for an economy earning enough foreign exchange.
Investors should therefore look at both reserve levels and how they are changing.
Are reserves rising while the CBN is also meeting market demand?
Or is stability being purchased through rapid reserve depletion?
The source of stability matters.
Oil still supplies a large share of Nigeria’s external earnings
Nigeria remains highly exposed to crude oil and gas.
When production and oil prices are strong, more foreign exchange can enter the economy.
When production falls or prices weaken, dollar supply comes under pressure.
Recent improvements in production are therefore relevant to the naira.
But a durable currency market cannot depend on one commodity.
Nigeria needs more export earnings from manufacturing, processed agriculture, technology services, entertainment, professional services and other sectors.
The exchange rate ultimately reflects what the country sells to the world relative to what it buys.
Portfolio investment can deepen the market and leave quickly
Foreign investors buying Nigerian government securities or equities bring dollars into the market.
Those inflows can increase liquidity.
They can also reverse rapidly if investors become nervous or find better returns elsewhere.
The IMF has warned Nigeria about risks associated with heavy dependence on portfolio flows.
This does not mean such investment is undesirable.
A healthy market needs different types of capital.
The problem is concentration.
Foreign direct investment into factories, infrastructure and long-term businesses is generally more stable than money invested in securities that can be sold quickly.
Nigeria should therefore ask not only how much foreign capital enters, but what kind.
Remittances are another source of market depth
Millions of Nigerians live abroad and send money home.
When those remittances pass through formal channels, they increase foreign-currency liquidity in the financial system.
The exchange-rate regime affects the choice.
If official channels offer a significantly worse rate than informal alternatives, senders have an incentive to avoid banks.
A credible market rate makes formal remittance channels more competitive.
Technology and lower transfer costs can help further.
Nigeria’s diaspora should therefore be viewed not merely as a source of household support but as an important part of the country’s FX ecosystem.
Exporters need confidence that they can use their earnings
One way to improve foreign-exchange supply is to encourage exporters to sell earnings into the formal market.
That requires trust.
An exporter needs confidence that rules will not change suddenly, that legitimate foreign-currency obligations can be met and that the market price is fair.
If exporters fear forced conversion at an unfavourable rate, they will try to keep earnings abroad or delay conversion where legally possible.
Predictable rules are therefore as important as enforcement.
A liquid FX market is built partly on participants believing they will be treated consistently.
Import demand is not automatically bad
Public discussion often treats demand for dollars as evidence of economic weakness.
That is too simple.
A factory importing machinery may be creating future productive capacity.
An airline needs aircraft parts. A technology company may need cloud services. A pharmaceutical manufacturer may import ingredients.
The quality of FX demand matters.
Consumption imports that Nigeria can efficiently replace locally create one kind of pressure. Capital goods that help firms produce and export create another.
Policy should not aim to suppress every dollar purchase.
It should help the economy generate enough dollar earnings to support productive demand.
What would real normalisation look like?
Nigeria should watch a set of indicators together.
Turnover should remain healthy over months, not only one week.
Official and parallel rates should remain relatively close.
Bid-ask spreads should be narrow enough to show active competition.
Businesses should report fewer delays obtaining FX.
Foreign reserves should remain adequate without unsustainable intervention.
Forward and derivatives markets should deepen.
Export proceeds and formal remittances should increase.
Foreign direct investment should become a larger share of capital inflows.
Inflation should continue moving toward lower, predictable levels.
No single indicator will prove success, but together they provide a stronger picture.
The naira does not need a symbolic exchange-rate target
Nigerian public debate often treats a particular naira-dollar rate as proof of national success or failure.
Currencies do not work that way.
A stronger naira can reduce import costs, but an artificially strong rate can discourage exports and create shortages.
A weaker currency can support competitiveness in theory, but rapid depreciation destroys planning and household purchasing power.
The appropriate objective is not a politically attractive number.
It is a market-clearing exchange rate supported by low inflation, productivity, export earnings, credible policy and adequate reserves.
Stability matters more than symbolism.
One busy week is encouraging, not conclusive
The rise to $2.63 billion in weekly FX turnover is a positive market datapoint.
It means transactions increased after the previous week’s decline.
It does not prove that all of Nigeria’s currency problems are solved.
The country should resist celebrating each weekly movement as a new era and panicking at every reversal.
The stronger test is whether businesses increasingly stop thinking of foreign exchange as a special crisis to manage.
A normal currency market is almost boring.
Companies can buy and hedge currency. Exporters can sell earnings. Investors can enter and exit under clear rules. The central bank does not have to dominate every transaction. The parallel market loses importance. Exchange-rate movements reflect information rather than panic.
Nigeria is not fully there yet.
But if turnover grows alongside reserves, exports, formal inflows, deeper forward markets and reliable access, then the $2.63 billion week will matter as part of a larger trend rather than a temporary statistic.
That is the confidence worth watching.
Sources and further reading
- FMDQ Group: market data and foreign-exchange market reports (https://fmdqgroup.com/markets/market-data/)
- Nairametrics, 28 September 2026: FX turnover rebounds to $2.63bn (https://nairametrics.com/2026/09/28/fx-spot-derivatives-drive-fx-trade-rebound-to-2-63-billion/)
- Central Bank of Nigeria: external reserves and FX information (https://www.cbn.gov.ng/)
- IMF, 2026 Article IV Consultation with Nigeria (https://www.imf.org/en/news/articles/2026/06/09/pr26190-nigeria-imf-executive-board-concludes-2026-article-iv-consultation-with-nigeria)
A. Joshua Adedeji
A. Joshua Adedeji is a leadership strategist, organisational development consultant, author, teacher and values-driven transformation leader. He writes on leadership, strategy, governance, organisational effectiveness, business, personal development and Nigeria’s social and economic transformation, connecting ideas and current realities to practical implications for leaders, institutions, entrepreneurs and citizens. His work is shaped by a commitment to clear thinking, responsible leadership, stronger institutions and the development of people and systems capable of producing lasting impact.
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