Nigeria’s FX market staged a rebound in July, with inflows rising 24% to $3.8bn as non-bank corporates, buoyed by stronger export earnings, overtook foreign portfolio investors for the first time in months.
Although the recovery follows a weaker June, inflows remain well below May’s $6.7 billion peak, highlighting continued volatility in FX liquidity.
FPIs Maintain Influence
Meanwhile, foreign portfolio investors (FPIs) drove around 45% of July’s inflows, bringing in $1.7 billion, up from $1.5 billion in June.
Analysts said offshore interest increased due to favourable carry trade conditions and relatively stable global markets.
However, FBNQuest warned that Nigeria’s reliance on FPI flows exposes the market to global shocks because these investors react sharply to risk sentiment, interest rates, and domestic stability.
Non-Bank Corporates Lead Supply
In addition, weekly data from Coronation Merchant Bank showed that non-bank corporates led FX supply.
They contributed $227.4 million (28.88%) in one week, surpassing exporters ($179.6m), the CBN ($171.2m), and FPIs ($167.4m).
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Individuals and other sources added less than 5%.
Notably, the CBN did not intervene directly that week.
On a monthly basis, non-bank corporates increased inflows from $800 million in June to $1.2 billion in July, reflecting stronger export earnings, particularly from upstream oil producers repatriating profits, and improved access to official FX channels.
CBN Interventions And Naira Trends
Despite firmer reserves, the CBN sold $326 million in July, compared with $183 million in June, to meet rising FX demand and support the naira.
Nevertheless, the naira weakened by 0.13% in July, closing at ₦1,534 per dollar.
On Tuesday, it declined further to ₦1,534.93 at the Nigerian Foreign Exchange Market, while remaining stable at ₦1,545 in the parallel market.
Outlook And Reserves
Looking ahead, analysts at Norrenberger cautioned that improving inflows might not last.
They expect monetary easing later this year to reduce FPI appetite and weigh on FX supply.
Meanwhile, Coronation Merchant Bank reported that inflows reached $787.5 million last week, up from $732.8 million the previous week.
Gross external reserves also grew by $431.9 million (1.07%) to $40.72 billion as of Wednesday, supported by consistent daily inflows.
