Nigeria’s foreign exchange market records historic  turnover 

By Philippine Duru

philippineobetoduru@gmail.com

0834905774

Nigeria’s foreign exchange (FX) market has achieved a historic milestone, recording transactions valued at $4.4 billion, a development that signals stronger market activity and growing participation by investors and authorized dealers.

The record turnover is being viewed by market participants as evidence of improving liquidity in the country’s foreign exchange market, following a series of reforms aimed at enhancing transparency, price discovery, and operational efficiency.

Analysts said the unprecedented transaction volume reflects increased activity from commercial banks, exporters, importers, foreign portfolio investors, and other market participants seeking to take advantage of improved access to foreign exchange.

The milestone comes as the Central Bank of Nigeria (CBN) continues to implement measures designed to deepen the Nigerian Foreign Exchange Market (NFEM), encourage market-driven pricing, and restore investor confidence.

According to financial experts, higher trading volumes generally indicate a more active and liquid market, allowing businesses and investors to buy and sell foreign currencies more efficiently while reducing transaction bottlenecks.

However, despite the positive development, analysts cautioned that they are closely monitoring unusual trading patterns and evolving liquidity trends to determine whether the record turnover reflects sustained improvements in market fundamentals or short-term trading activity.

Some market observers noted that while increased turnover is a positive indicator, the quality and sustainability of liquidity remain critical to ensuring long-term exchange rate stability and efficient market functioning.

They stressed that consistent foreign exchange inflows from oil exports, non-oil exports, diaspora remittances, and foreign investments would be essential to maintaining the momentum and supporting the naira over the long term.

Economists also pointed out that a deeper and more liquid foreign exchange market could enhance investor confidence, improve access to foreign currency for manufacturers and businesses, and support international trade by reducing delays in foreign exchange transactions.

They added that continued policy consistency and effective regulatory oversight would be necessary to sustain market confidence and prevent excessive volatility.

The record $4.4 billion turnover underscores the increasing depth of Nigeria’s foreign exchange market and highlights the impact of ongoing reforms aimed at creating a more transparent, competitive, and resilient financial system.

While stakeholders have welcomed the milestone, market participants say attention will remain focused on liquidity conditions, trading behaviour, and the ability of the market to sustain high transaction volumes without triggering excessive exchange rate volatility.

Analysts believe that if current reforms are maintained and foreign exchange inflows continue to improve, Nigeria’s FX market could become more attractive to both domestic and international investors, further strengthening the country’s financial markets and supporting broader economic growth.