Economy
All You Need to Know About Trading in Currency Market
Online trading of currencies is gaining momentum all around the world since the last two decades. Africa alone today has estimated approx. 1.3 million forex traders, South Africa and Nigeria are the leading countries with around 400,000 traders locally combined.
The currency market is a decentralized international financial market where buying, selling and exchange of global currencies among buyers and sellers take place.
In the currency market, the values of currencies are determined based on supply and demand, and it is the largest financial market with transactions crossing over $6.6 trillion per day.
The bulk of currency trading volume comes from trading between banks, institutions, governments and companies. But approximately 5.5% of trading volume constitutes of retail investors and this figure is growing.
The advancement in internet, electronic trading tech, the rise of low-cost brokerages and the availability of diverse trading platforms to African traders have caused online trading to gain popularity among retail investors in Africa, especially Nigeria and South Africa.
How does currency or Forex market work? What decides currency rates?
Currency trading is the buying, selling and exchange of currencies like Euro or the US Dollar or any other two currencies against one another; where you give one currency to get another.
If you have travelled abroad or ordered something online from a different country in another currency like EUR or USD, then it is likely you have made a forex transaction.
Currency trading always involves trading between a pair of currencies. In contrast to stock trading where you buy a company’s share, it involves taking a position on a currency pair.
For example, GBP/USD represents the value of how much US Dollars you can buy with one Pound. If you think that Pound’s value will rise, you buy GBP with dollars. If your prediction is right, you could make a profit. Similarly, you can trade any other currency available in the Forex Market.
FX or currency market works on a simple economic concept of demand and supply. For instance, if there are more buyers for the US dollars in the market, its value will appreciate and vice-versa.
The demand and supply are affected by global trade, geopolitical events, interest rates and financial news. These factors create volatility in the currency market which in turn creates an opportunity for traders to speculate on the movements of currency prices.
For example, if the US Federal Reserve announces a higher interest rate, then US dollars will appreciate and other weaker currencies will likely depreciate against it.
What differentiates FX from other financial markets is that it operates 24 hours in different time-zones. It means when the trading day ends in the US, it begins in Japan and Hong Kong. That’s why currency prices are constantly changing.
How are currencies traded?
Currencies are always traded in pairs like EUR/USD or GBP/EUR.
There are mainly four ways how institutions, companies and individuals trade in FX market: spot contracts, swaps, forward and options. Swaps account for roughly 50% of the total FX trade.
Forex Spot, Forward and Swap Contracts
Most actual trade or non-speculative trade of currencies between banks, corporations, the governments take place using contracts like spot, forward and swaps.
In the Spot FX, currencies are exchanged at the current market price or exchange rate. Spot trades are usually settled within 2 days of contract and the majority of currency trading takes place through swaps.
Swap, also known as a cross-currency swap, is an agreement between two parties to exchange two different currencies at a predetermined spot-rate over a period of time. Swaps are more common among financial institutions or governments. Global companies usually get into a currency swap mainly for securing cheaper debts.
The forward contract is similar to spot trading, except in this the currency exchange occurs in the future. A forward contract entails an agreed-upon exchange rate, volume and a specified maturity date. When the contract reaches it maturity date, the buyer has to pay the amount at the agreed-upon exchange rate. The buyer may incur losses if the current spot rate is lower than the pre-agreed rate.
Currency Derivatives
Currency derivatives are of two types options or futures. Currency derivatives are considered one of the best options to manage currency-risks. They are usually exchange-based futures and options contracts. These future-oriented currency contracts can be purchased at a predetermined price and date.
FX Options is a contract where a buyer obtains the right to buy foreign currencies from a seller at a specified rate and date. The buyer, however, is not obligated to buy it. Similar to insurance, the buyer just needs to pay the premium to buy an FX Option. FX Futures contract is similar in nature but parties are obligated to settle the contract.
Multinational corporations usually use FX Options to protect their investments from currency fluctuations.
Locally in Nigeria, the Nigerian Stock Exchange (NSE) is planning to introduce financial derivatives next year. Currently, LCSE offers trading in four asset classes including currencies (both local and foreign). In the rest of Africa, JSE offers currency derivatives on all major currencies against ZAR.
Currency CFDs
A contract for difference (CFD) is an agreement between the two parties (trader and broker) to exchange the difference in the price of an underlying asset at the end of the trade. The difference in price is calculated from the point when the contract opened to when it ended. In CFD trading, neither broker nor the investor owns any underlying asset.
Most retail forex traders trade forex online as CFDs with retail forex brokers. But there are no locally regulated forex brokers in Nigeria.
All the best forex brokers available in Nigeria are foreign brokers that offer CFDs on currency pairs. As online forex trading is still unregulated in Nigeria, traders must ensure they only trade with top-tier regulated brokers for safety of their funds & fair-dealing; like through brokers regulated by FCA or ASIC or CySEC.
How currency trading can be risky?
The Forex market is inherently risky. The risks range from market risks like extreme volatility to other risks like the use of high margin.
Here are some of the risks that you should watch out for:
Market volatility and unpredictability
The forex market can be highly unpredictable. The release of a new economic data or a new bilateral/regional trade deal can cause volatility in the Forex market.
Major currency pairs tend to remain relatively stable. But exotic currency pairs which have lower trading volumes can be very volatile.
Volatile currencies tend to move in any direction based on a market event or even without it in some cases. The unpredictable movement can cause huge losses.
Leverage and margin risk
The availability of high leverage is one of the reasons why currency trading is why so many traders get attracted to it.
Leverage can amplify a trader’s profit but at the same time, the unwise use can cause significant losses.
For example, in a 100:1 leverage factor, a trader could trade USD$10,000 with just $100 margin deposit. So, suppose a currency pair made a 1 pip loss that means loss of $1. If it changes to 50 pips loss than half of your margin money could be gone in seconds.
Counterparty or third-party risk
Risks related to counter-party or market maker or Broker, where they are not able to fulfil your contract or order due to credit risk or volatile market conditions is another major risk factor. And sometimes these counterparties also deal in malpractices.
There have been numerous instances in the past when people were fooled through Ponzi schemes & bad brokers. For the safety of your capital, one must always choose a broker that is regulated by multiple Tier I and Tier II regulators.
Other risks to know
There are other associated risks too with trading currencies including Country risk, Interest Rate Risk, Transaction Risk, Liquidity Risk etc. One must understand all these risks and try to mitigate them before trading.
Another major risk is of losing money. There is no denying that Forex trading is very risky. Roughly 60-70% of traders lose their capital due to different reasons. However, unwise use of leverage is considered one of the top reasons for trading-losses.
One can possibly mitigate some of these risks by adopting a sound trading plan, using leverage (max 1:10) and proper risk management.
By Adedapo Adesanya
The Central Securities Clearing System (CSCS) Plc has declared the first interim dividend in its history after posting its financial results for the first half of 2026, reflecting robust earnings growth, improved operating efficiency and stronger capital market activity.
The board approved an interim dividend of N1.00 per ordinary share for the six months ended June 30, 2026, citing the company’s strong cash generation, resilient balance sheet and confidence in the sustainability of its earnings.
The interim payout represents about 56 per cent of the total dividend of N1.78 per share paid for the 2025 financial year, underscoring its strong earnings momentum while preserving financial flexibility to invest in technology, innovation and future growth.
CSCS recorded one of the strongest financial performances in its history during the review period, with total operating income rising by 92 per cent to N18.51 billion from the corresponding period of 2025.
The growth was driven by higher transaction fee income as capital market activity strengthened, continued expansion in depository services, increased collateral management revenues and stronger contributions from data and technology-enabled services. Investment income also improved as the company optimised its investment portfolio.
Despite the sharp rise in revenue, operating expenses increased by only 38 per cent, reflecting disciplined cost management and the scalability of the company’s business model.
As a result, operating profit surged by 186 per cent to N10.11 billion, while profit before tax climbed by 115 per cent to N13.21 billion. Earnings per share also rose significantly to 190.1 kobo from 109.1 kobo in the corresponding period of 2025.
The organisation also recorded improvements in operating efficiency. Its cost-to-income ratio declined to 45.4 per cent from 63.2 per cent a year earlier, while operating profit margin improved to 54.6 per cent from 36.8 per cent.
According to the company, the results demonstrate not only the benefits of stronger market activity but also the resilience of its operating model and its ability to convert revenue growth into higher profitability, improved shareholder returns and sustainable long-term value creation.
Commenting on the interim dividend, the Chairman of CSCS Plc, Mr Temi Popoola, said the board’s decision reflected confidence in the firm’s financial strength, earnings quality and long-term strategic direction.
He said the strong performance was driven not only by increased market activity but also by sustained improvements in operational efficiency, disciplined cost management and the continued diversification of revenue streams.
Mr Popoola noted that the Board remained committed to balancing shareholder returns with investments in technology, innovation, resilience and new growth opportunities that would strengthen CSCS’ position as Nigeria’s leading financial market infrastructure and one of Africa’s foremost post-trade institutions.
The chief executive of CSCS Plc, Mr Shehu Yahaya Shantali, attributed the strong performance to the resilience of the entity’s business model, the dedication of its workforce and the confidence of market participants.
He said the first-ever interim dividend demonstrated the company’s ability to translate strong earnings growth and improved operating efficiency into enhanced shareholder value.
Mr Shantali added that CSCS would continue to strengthen its core market infrastructure, invest in technology and innovation, diversify its revenue base and enhance value creation for stakeholders while supporting the development of Nigeria’s capital market.
By Aduragbemi Omiyale
The national scale long-term issuer rating of Axxela Limited has been upgraded by GCR Rating to A+(NG), just as its short-term issuer rating was affirmed with a stable outlook.
The rating firm upgraded the long-term issue rating for Axxela Funding 1 Plc’s N16.4 billion series 1 senior unsecured bond to A+(NG), while the N11.5 billion series 1 senior secured bond was lifted to A+(NG)(EL).
GCR noted in a note that the actions reflect the leading gas and power portfolio company’s robust business model, strong earnings performance, and sustained financial profile, reinforcing its ability to deliver long-term value while maintaining financial discipline.
Axxela’s recent achievements have been driven by its continued focus on responsible growth, customer satisfaction, and creating lasting value for national development.
“The ratings upgrade by GCR is a strong endorsement of Axxela’s disciplined approach to business. Beyond recognising our financial strength, it reflects the resilience of our business model and the confidence in our strategic direction.
“Over the past few years, we have continued to make significant strides across the business by expanding our natural gas infrastructure, strengthening our operational footprint, advancing our sustainability agenda, and maintaining an unwavering commitment to operational excellence and safety,” the chief executive of Axxela, Mr Moshood Olajide, commented on the development.
As the company continues to advance its long-term growth strategy, the upgraded ratings reinforce confidence in Axxela’s credit profile, financial resilience, and ability to create enduring value for investors, customers and other stakeholders.
By Adedapo Adesanya
The Ministry of Solid Minerals Development and the National Identity Management Commission (NIMC) have strengthened their partnership to deploy digital identity technology, aiming to combat illegal mining and enhance security in Nigeria’s mining sector.
Speaking while receiving the Director-General and management of NIMC on a courtesy visit to his office in Abuja, the Minister of Solid Minerals Development, Mr Dele Alake, described the commission as a critical institution in Nigeria’s development architecture, stressing that effective governance could not be achieved without a credible identity management system.
“NIMC occupies a critical position in translating policy into reality. It is pivotal to the development of any nation because governance today is driven by data, technology and credible identity systems,” he added.
He noted that inadequate identification systems had weakened enforcement efforts over the years, allowing illegal mining activities to flourish in mineral-rich communities.
“Without identification, we cannot trace or track, and insecurity will flourish. In the solid minerals sector, we need effective monitoring of both legal and illegal operations.
“A credible identity ecosystem will strengthen regulation, improve enforcement and support our efforts to sanitise the sector,” Mr Alake said.
The minister identified technology, statistics, data gathering and digital identity as critical enablers for evidence-based policymaking, improved regulatory oversight, efficient licensing, investment promotion and national development.
On her part, the DG of NIMC, Mrs Abisoye Coker-Odusote, highlighted several opportunities for collaboration between both institutions, noting that the newly enacted NIMC Act has positioned Nigeria to fully embrace a digital governance ecosystem.
She explained that deeper integration of identity management into the solid minerals sector would facilitate database integration across government institutions, enhance regulatory compliance, strengthen security and law enforcement, improve monitoring of operators, and provide stronger support for the implementation of Community Development Agreements (CDAs) in mining host communities.
Mrs Coker-Odusote added that NIMC’s upgraded digital infrastructure is capable of supporting government institutions in building reliable databases, improving transparency and delivering more efficient public services.
Both institutions said they would immediately begin implementing technology-driven initiatives under the partnership, expressing confidence that expanding access to trusted digital identities for miners and other eligible residents would enhance accountability and strengthen governance in the solid minerals sector.
