With no end in sight to the depreciation of the naira against the dollar, there was an increase in foreign exchange forwards contracts this week.
An FX forward is a contractual agreement between a client and a bank, or a non-bank provider, to exchange a pair of currencies at a set rate on a future date.
The total turnover in the FX spot and derivatives markets, the total turnover rose by 25.16 percent to $678.24 million this week from $541.91 million last week, according to FMDQ Securities Exchange.
The increase in the total turnover was jointly driven by the 24.33 percent ($128.11 million) and 53.34 percent ($8.22 million) increases in FX spot and derivatives turnover, respectively.
The increase in FX derivatives turnover was solely driven by the 53.34 percent ($8.22 million) increase in FX forwards turnover, whilst there were no trades executed in both Exchange-Traded FX Futures and Cleared Naira-Settled Non-Deliverable Forwards markets.
It said: “In the FX Spot market, the total value of transactions for the week-ended November 10, 2023, was $654.61 million, representing an increase of 24.33% ($128.11 million) from the value of transactions executed in the week-ended November 3, 2023 ($526.50 million).
“For the week-ended November 10, 2023, the average Nigerian Autonomous Foreign Exchange Fixing rate was $/₦839.74, compared to $/₦824.73 recorded in the week-ended November 3, 2023, representing a depreciation of the Naira against the United States (US) Dollar by 1.79% ($/₦15.01).”