•Hits $3.11bn in March as supply rises to counter Trump’s tariffs
By Chinwendu Obienyi
Despite global trade uncertainties, inflows from local sources rose to a 22-month high, rising by 51 per cent month-on-month (m/m) to $3.11 billion), the latest report from Cordros Research revealed on Monday.
The figure represents an increase when compared to $2.06 billion recorded in February and was boosted by the Central Bank of Nigeria (+204.3 per cent), non-bank corporates (+26.7 per cent) and exporters/importers (+21.5 per cent) segments amid a decline in the inflows from individuals (-43.7 per cent) segment during the reporting period.
The report revealed that this came on the back of a 5.5 per cent decline in total inflows into Nigerian Foreign Exchange Market (NFEM).
It said, “Total inflows into the NFEM declined by 5.5 per cent m/m to $3.90 billion in March as against $4.13 billion recorded in February.
We attribute the decline to the substantial decrease in inflows from foreign sources (20.2 per cent of total inflows), which dipped by 61.9 per cent m/m to $787.20 million (February: $2.07 billion) – the lowest level in six months – due to erosion of market confidence following global trade uncertainties”.
As a result, the FPI (-67.7 per cent m/m) segment recorded lower accretion, while inflows from other corporates (+89.8 per cent m/m) and FDI (+54.2 per cent m/m) segments increased. Owing to the development, analysts at the investment and research based firm said that they expect that foreign exchange (FX) inflows will remain robust, driven by improved market confidence in the short term.
“However, the moderation in yields and global trade uncertainties are likely to dampen carry trade opportunities, restraining FX inflows from FPIs, ultimately affecting overall FX liquidity”, they said.
The forecast from the Cordros Research is coming after the naira came under renewed pressure following fresh U.S tariffs which rattled global markets and weighed on oil prices at the weekend.
Data from the apex bank revealed that the official FX rate appreciated by 0.2 per cent to N1,536.00/$1 as FX sales by offshore players driven by an expected OMO auction offset the lack of intervention from the CBN and negative sentiments stemming from the imposition of a 14 per cent tariff by Trump on Nigerian exports to the US and increased oil supply by OPEC+, causing oil prices to temper.
However, the country’s gross FX reserves declined for the third consecutive week by $135.57 million week-on-week (w/w) to $38.17 billion (April 2).
Although, the Central Bank has announced that it remains committed to ensuring adequate liquidity and supporting orderly market functioning.
In a statement signed by the bank’s director, financial markets department, Omolara Duke at the weekend, the CBN facilitated market activity on Friday, April 4, 2025, with the provision of $197.71 million through sales to authorized dealers.
Duke noted that this measured step aligns with the apex bank’s broader objective of fostering a stable, transparent, and efficient foreign exchange market.
Duke added that recent movements in the foreign exchange market between April 3 and 4, 2025, showed broader global macroeconomic shifts currently affecting several emerging market and developing economies.
These developments, Duke said, were as a result of the recent announcement of new import tariffs by the United States government on imports from several economies, which has triggered a period of adjustment across global markets.
Crude oil prices have also weakened – declining by over 12 per cent to approximately $65.50 per barrel – presenting new dynamics for oil-exporting countries such as Nigeria.
“The CBN continues to monitor global and domestic market conditions and remains confident in the resilience of Nigeria’s foreign exchange framework, which is designed to adjust appropriately to evolving fundamentals.
All authorized dealers are reminded to adhere strictly to the principles outlined in the Nigeria FX Market Code and to uphold the highest standards in their dealings with clients and market counterparties”, the CBN director said.