Nigeria’s FX Market Still Faces Deepening Challenges Despite $14.30bn Turnover – Report

Nigeria’s foreign exchange (FX) market continues to face significant headwinds, with fresh data showing increased volatility and a deepening depreciation of the Naira, complicating efforts to stabilise the economy and worsening the ease of doing business in the country.

According to the FMDQ Markets Monthly Report for March 2025 seen by THE WHISTLER, spot FX market turnover recorded on the FMDQ Exchange stood at $14.30bn (₦21.93trn), representing a 6.47 per cent month-on-month (MoM) increase from the $13.43bn recorded in February 2025.

Despite the rise in turnover, the underlying challenges of liquidity strain, unpredictable policy shifts, and fluctuating oil prices continue to weigh heavily on the market’s performance.

The report revealed that the Naira weakened further against the U.S. Dollar during the month under review, with the spot exchange rate depreciating by 1.92 per cent to an average of ₦1,533.00/$, compared to ₦1,504.18/$ in February.

Exchange rate volatility also intensified, with the Naira trading between ₦1,499.00/$ and ₦1,549.00/$, a wider band than the ₦1,495.00/$ to ₦1,515.00/$ range recorded the previous month.

Market analysts attribute the sustained volatility to a combination of external and internal pressures. Externally, global oil price fluctuations have reduced Nigeria’s foreign exchange earnings, given the country’s heavy reliance on crude oil exports.

Internally, inconsistent monetary policies and challenges in liquidity management by the Central Bank of Nigeria (CBN) have further compounded the fragility of the FX market.

Beyond the FX market, activity in Nigeria’s broader financial markets also showed signs of strain. Fixed income (FI) market turnover dropped to ₦17.26trn in March 2025, representing a 6.54 per cent decline from ₦18.47trn recorded in February.

This decline was driven by reduced transactions in CBN Bills, Open Market Operations (OMO) Bills, and Federal Government of Nigeria (FGN) Bonds.

Similarly, total spot market turnover across all products on the FMDQ Exchange stood at ₦53.80trn in March 2025, reflecting a 6.27 per cent MoM decline from February’s ₦57.40trn.

This overall decline was mainly attributed to a 22 per cent drop in Money Market (MM) turnover and a 6.54 per cent drop in Fixed Income turnover, partially offset by the increase in FX market turnover.

Specifically, the money market segment suffered a steep decline due to reduced activity, further highlighting liquidity tightening in the financial system.

Meanwhile, the trading intensity (TI) for T-bills improved slightly, increasing by 0.09 basis points to 0.45, while TI for FGN bonds slipped by 0.07 basis points to 0.07, indicating waning investor appetite for longer-term government debt instruments amid growing macroeconomic uncertainties.

The combined impact of rising FX volatility, weakening investor confidence, and tightening financial conditions poses significant risks to Nigeria’s growth outlook.

As the business environment grows increasingly challenging, stakeholders have called for a coordinated response from monetary authorities, including the adoption of consistent, transparent, and market-friendly policies aimed at stabilising the Naira, boosting liquidity, and restoring investor confidence.

Without urgent reforms, experts warn, Nigeria’s ambition to attract foreign investment, stimulate economic growth, and foster an enabling environment for businesses could remain out of reach.

Nigeria’s FX Market Still Faces Deepening Challenges Despite $14.30bn Turnover – Report is first published on The Whistler Newspaper