Nigeria’s foreign exchange market began 2026 on a strong note as foreign investors pushed inflows to $3 billion in January.
Strong FX Inflows
Consequently, FX supply rose 7% from December, marking the second consecutive month of recovery and growing market liquidity.
Portfolio Investors Lead
Notably, portfolio investors drove the surge, contributing $1.6 billion—more than double December’s total.
Almost all of this capital flowed into fixed-income instruments, while equities received only $38.7 million.
Meanwhile, international corporate investors added $155.4 million, and foreign direct investment increased slightly to $50.3 million.
Together, these inflows highlight offshore capital as the dominant force shaping FX supply, whereas domestic contributions weakened.
Specifically, the Central Bank of Nigeria (CBN) provided only $34 million, down sharply from $654 million in December.
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Similarly, individual inflows fell 39% to $168.7 million, and exporter inflows dropped 15% to $582 million.
By contrast, non-bank corporates recorded a modest 2.4% rise, contributing 14% of total FX supply.
High Yields Attract
Furthermore, Nigeria’s high yields and tight monetary policy continue to attract global investors.
As a result, short-term portfolio flows stabilise the naira and reduce pressure on the currency market.
Importantly, fixed-income instruments absorb most foreign capital, while equities remain a minor beneficiary.
Consequently, stronger foreign participation moderates volatility and reduces reliance on official FX interventions.
In addition, external reserves climbed to roughly $46 billion, reaching the highest level in nearly eight years.
This increase reflects stronger inflows, improved buffers against market shocks, and renewed investor confidence.
Looking ahead, sustained foreign interest gives policymakers greater flexibility, although they still need to convert short-term flows into long-term investments.
If this trend continues, Nigeria could enjoy a more resilient FX market in 2026, relying less on official interventions and more on global investor confidence.
