Nigeria FX Inflows Drop 21% as Foreign Investment Dries Up
Dollar inflows into Nigeria’s official foreign exchange market fell sharply last week, underscoring continued foreign investor caution despite sustained Central Bank of Nigeria (CBN) intervention and recent market reforms.
Data from the Nigeria Foreign Exchange Market showed that total FX inflows declined by 20.67 per cent week on week to $593.70 million, down from $748.40 million recorded in the previous week. A research note by Coronation Merchant Bank attributed the slide largely to a steep pullback by offshore investors.
Foreign portfolio investment inflows plunged by 72.91 per cent to $46.0 million from $169.8 million a week earlier, while foreign direct investment dropped by 81.87 per cent to just $7.0 million, compared with $38.6 million previously.
As a result, foreign sources accounted for only 17.05 per cent of total FX supply to the official market, highlighting persistent global investor scepticism over Nigeria’s macroeconomic outlook.
With external flows weakening, domestic sources dominated FX liquidity, contributing 82.95 per cent of total inflows. Individuals led local supply with $165.1 million, followed by the CBN at $128.0 million, while exporters and importers supplied $115.6 million.
Analysts say the growing reliance on domestic flows points to continued dependence on central bank support and internal FX recycling, rather than sustainable foreign capital inflows.
The naira posted mixed performance across markets. At the official window, it appreciated by 0.88 per cent week on week to close at N1,430.85 per dollar, supported by sustained CBN dollar sales.
However, the currency weakened in the parallel market to around N1,490 per dollar, reflecting lingering demand pressures outside the formal trading system.
Nigeria’s external reserves edged higher by 0.58 per cent to $45.50 billion, rising by about $264.56 million at the start of the year. This modest increase came despite heavy intervention, with estimates showing the CBN spent about $4.1 billion in the first half of last year to stabilise the naira and support market liquidity.
Platforms such as the Bloomberg FX Matching System and the Electronic Foreign Exchange Matching System have improved transparency and narrowed rate gaps, but analysts warn that stability remains fragile without a rebound in autonomous FX inflows.
Coronation expects the naira to trade within a relatively narrow band at the official market in the near term, supported by continued intervention and easing post–year-end demand. Looking into 2026, the bank projects the currency will trade between N1,400 and N1,500 per dollar, driven by higher oil output, reduced fuel import dependence and stronger export earnings.
It cautioned, however, that lasting FX stability will depend on policy consistency, improved investor confidence and a more transparent, market-driven framework capable of attracting long-term foreign capital.
