Follow Us on Google
Foreign exchange inflows into Nigeria’s official market rose sharply in October, driven principally by a major increase in dollar supply from the Central Bank of Nigeria (CBN), according to data from the Financial Markets Dealers Association (FMDQ).
Total inflows into the Nigerian Foreign Exchange Market (NFEM) increased by 61.7 per cent month-on-month to $8.28 billion in October, from $5.12 billion recorded in September. The improvement was largely supported by domestic sources, which supplied $5.11 billion, or 61.7 per cent of total inflows during the period.
Domestic FX inflows more than doubled, rising by 148.1 per cent from $2.06 billion in September. The surge reflected higher contributions from the CBN, individuals, exporters and importers, as well as non-bank corporates.
The CBN was the single biggest driver of the improvement. Official inflows from the apex bank surged by 421.7 per cent month-on-month, pointing to a substantial increase in the supply of dollars into the market. The development suggests that the monetary authority intensified its intervention in the FX market to improve liquidity and moderate pressure on the naira.
Inflows from individuals rose by 74.0 per cent month-on-month, while receipts from exporters and importers increased by 71.5 per cent. Non-bank corporates also recorded a 55.5 per cent increase in inflows, reinforcing the broad-based nature of the domestic supply improvement.
Foreign inflows, however, grew at a more modest pace. Gross foreign FX inflows rose by 3.5 per cent month-on-month to $3.17 billion in October, compared with $3.06 billion in September. Foreign sources accounted for 38.3 per cent of total inflows in the month.
Other News
Despite the increase in gross foreign inflows, the NFEM recorded net foreign outflows of $1.41 billion in October. This represented a reversal from September, when the market recorded net foreign inflows of $1.03 billion.
The shift in net foreign flows may have increased pressure on the market’s supply-demand balance. It also underscores the importance of the CBN’s higher official supply in sustaining liquidity and limiting volatility in the exchange rate. Market analysts expect FX liquidity to remain relatively robust in the near term, supported by sustained interest from foreign investors in naira-denominated assets.
Although yields have moderated recently, they remain attractive enough to encourage portfolio inflows into Nigerian securities.
However, the outlook is not without risks. Geopolitical uncertainty and changes in global risk sentiment could trigger intermittent volatility in foreign investment inflows, potentially affecting the stability of dollar supply into the market.
The CBN is therefore expected to remain active in the FX market, intervening selectively where necessary to address temporary supply-demand imbalances. Such intervention is aimed at easing exchange-rate pressure and preserving relative stability in the naira.
Overall, October’s data show a significant improvement in FX supply, with the CBN playing a decisive role. But the net foreign outflow recorded during the month highlights the need for sustained private-sector inflows and continued investor confidence to support a more durable improvement in market liquidity
