Dollar inflows into Nigeria’s FX market stumbled last week as foreign investors pulled back sharply.
Consequently, total inflows fell 20.7% to US$593.7 million, down from US$748.4 million the previous week.
Dollar Inflows Stumble As Foreign Investors Retreat
This sudden decline highlighted growing caution among global investors despite recent FX reforms.
Coronation Merchant Bank highlighted that foreign portfolio and direct investors drove the largest pressure.
Foreign Participation Drops Sharply
Specifically, portfolio inflows plunged 73% to US$46 million, while direct investment collapsed 82% to US$7 million.
As a result, foreign sources contributed only 17% of total FX inflows, signalling persistent hesitancy from overseas participants.
Domestic Sources Take The Lead
Meanwhile, domestic players stepped in, supplying nearly 83% of total market liquidity.
Individuals led with US$165.1 million, the CBN added US$128 million, and exporters contributed US$115.6 million.
Analysts emphasise that Nigeria still relies heavily on central bank support rather than steady foreign capital, reflecting structural market vulnerabilities.
At the official window, the naira strengthened 0.88% to ₦1,430.85/US$, aided by sustained CBN dollar sales.
However, in the parallel market, it weakened to around ₦1,490/US$, reflecting persistent demand pressures outside formal channels.
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Meanwhile, external reserves rose slightly, 0.58%, reaching US$45.5 billion despite heavy CBN interventions last year.
The CBN spent approximately US$4.1 billion in 2025 defending the naira and maintaining liquidity.
Furthermore, platforms like BMatch and EFEMS improved transparency and narrowed the gap between official and parallel rates.
Analysts warn stability remains fragile without a rebound in autonomous foreign inflows.
Looking ahead, Coronation projects the naira will trade between ₦1,400–₦1,500/US$ in 2026, supported by higher oil production, reduced fuel imports, and stronger export-driven FX liquidity.
Durable stability depends on policy consistency, investor confidence, fiscal discipline, and market-driven FX reforms.
With foreign investors retreating, Nigeria’s FX market increasingly relies on domestic resilience and cautious optimism.
