The foreign exchange market in Nigeria experienced a significant decline in turnover during the month of April 2024, according to the latest report from the FMDQ Markets. The report reveals that spot FX market turnover reached $9.12 billion (equivalent to N11.14 trillion), representing a month-on-month decrease of 27.68% from the turnover recorded in March 2024.
The challenges faced by Nigeria’s foreign exchange market are attributed to various factors, including fluctuations in global oil prices and economic policies affecting liquidity. Despite initial hopes, the Naira depreciated against the US Dollar by 5.8% in April.
In the FX market, the Naira experienced a steep appreciation against the US Dollar, with the spot exchange rate ($/N) decreasing by 22.45% to close at an average of $/₦1,244.66 in April 2024. However, exchange rate volatility slightly increased during the month, with the Naira trading within a range of $/N1,072.74 – $/N1,419.11.
The report also highlights the performance of the Fixed Income (FI) market, noting a turnover of N8.33 trillion in April 2024, representing a month-on-month decrease of 30.87%. This decrease was primarily driven by declines in turnover across T.Bills, FGN & Other Bonds, OMO Bill, and Special Bills transactions.
Furthermore, the Money Market segment experienced a 44.40% decrease in total turnover to N6.59 trillion in April 2024. This decline was driven by decreases in Repos/Buy-backs and Unsecured Placement/Takings transactions. Despite the decrease, the average overnight (O/N) rate and secured lending rate (OPR rate) decreased slightly compared to the previous month.
Total turnover in the FX derivatives segment also saw a significant decrease of 68.22% to $1.18 billion (₦1.44 trillion) in April 2024. This decline was primarily driven by decreases in FX Swaps and FX Forwards turnover. The FX Futures market remained inactive during the review period.
In summary, the total spot market turnover for all products traded in the secondary market in April 2024 was N26.06 trillion, indicating a month-on-month decrease of 39.68%. This decrease was observed across all spot market product categories, including FX, MM, and FI turnover.
The report underscores the ongoing challenges faced by Nigeria’s financial markets, reflecting the need for strategic interventions to stabilize and enhance market performance amidst external and internal economic pressures.
