Nigeria’s Forex Market Liquidity Sinks 55% as Reserves Extend Slide

By Lydia Oluremi

The liquidity in Nigeria’s official foreign exchange market tumbled by 54.79 percent this year as the country’s external reserves continued to decline, according to official data compiled by Markets Reporters.

Data from FMDQ Securities Exchange show that the turnover in the FX spot and derivatives markets dropped to $1.23 billion from $2.71 billion last week.

The decrease in total turnover was driven by FX spot transactions, which fell by 55.14% to $1.22 billion, while derivatives transactions rose by $9.42 million.
 
“The increase in FX derivatives turnover was solely driven by the $9.42 million increase in FX forwards turnover, whilst there was continued lack of activity in both the exchange-traded FX futures and cleared naira-settled non-deliverable forwards markets,” FMDQ said.

The country’s external reserves dipped to $37.88 billion as of Wednesday from $38.05 billion a week earlier, according to the Central Bank of Nigeria.