The foreign exchange market in Nigeria has experienced a dramatic decline in turnover, plummeting by 44.9% to $2.05 billion for the week ending August 14, 2026. This significant drop from $3.73 billion recorded the previous week marks a loss of $1.67 billion in total market activity, as reported by FMDQ Securities Exchange.

The downturn is attributed to ongoing fluctuations in local liquidity demand, where interbank authorized dealers and corporate clients are adjusting their foreign currency exposures based on immediate trade obligations and broader economic indicators. The FX Spot transactions, which are crucial for immediate foreign currency settlements, saw a notable contraction of 46.98%, falling from $3.70 billion to $1.96 billion. This decline has resulted in a reduction of the daily average for FX Spot transactions from $740.89 million to $443.22 million, diminishing its share of total market activity from 99.33% to 95.58%.

In contrast, the FX Derivatives market showed remarkable growth during the same period, reflecting a shift in strategy among market participants towards risk management and hedging. The turnover in this segment surged by 263.56%, increasing from $25 million to $90.89 million. This growth was entirely driven by the FX Forwards market, which also saw a 263.56% increase, rising by $65.89 million. Consequently, the daily average for derivatives transactions climbed from $5 million to $18.18 million, boosting its market share from 0.67% to 4.42%.

Despite the impressive rally in forward contracts as institutions aimed to secure future exchange rates, it was not enough to counterbalance the steep decline in spot trading. Overall, the total daily average turnover across both market segments fell from $745.89 million to $461.40 million during the reporting period. This contraction highlights the challenges faced by the foreign exchange market amid changing economic conditions and liquidity demands.