By Chinwendu Obienyi
Mounting global trade tensions and persistent macroeconomic uncertainties took its toll on Nigeria’s foreign exchange market, with total inflows into the Nigerian Foreign Exchange Market (NFEM) falling by 5.7 per cent month-on-month (m/m) at the end of April 2025.
According to a weekly economic report from Cordros Research, the inflows decreased to $3.67 billion compared to $3.90 billion recorded in March.
The report attributed the downturn to a sharp decline in foreign-sourced inflows, which dropped by 16.5 per cent to $657.40 million, marking the lowest level in seven months.
Hence, foreign inflows now account for just 17.9 percent of total market liquidity, signaling waning investor confidence in response to rising global volatility and cautious sentiment toward emerging markets.
Breakdowns from the report show that foreign portfolio investment (FPI) fell by 15.7 per cent, while inflows from other corporates contracted by a steep 40.5 per cent. In contrast, foreign direct investment (FDI) rose significantly by 112.7 per cent, offering a rare bright spot and suggesting that long-term capital is still flowing into select sectors of the economy.
On the domestic side, inflows—which make up 82.1 per cent of the total—declined marginally by 2.9 per cent to $3.02 billion, down from $3.11 billion in March. The drop was primarily driven by reduced contributions from exporters and importers (-23.9 per cent) and non-bank corporates (-23.3 per cent). However, the downturn was partially offset by surging inflows from individuals, which rose by 125.4 per cent, and a 43.8 per cent increase in Central Bank of Nigeria (CBN) interventions.
Despite April’s decline, monthly FX inflows remain well above the 2024 average of $2.54 billion, reflecting improved market structure and sustained efforts by the CBN to deepen market liquidity.
The apex bank’s more active role in the FX market combined with exchange rate unification reforms introduced in mid-2023 has helped stabilise short-term inflow trends.
Still, analysts caution that the outlook remains clouded by global headwinds. “Although local sources and central bank support remain resilient, the sharp decline in foreign inflows underscores the risks posed by external shocks,” the Cordros report noted. “If trade tensions escalate further and investor uncertainty persists, the foreign segment could continue to underperform, affecting overall liquidity conditions.”
The report comes at a critical time as Nigeria intensifies efforts to attract sustainable capital, rein in inflation, and stabilise the naira. In recent months, the government has pursued structural reforms aimed at boosting investor confidence, while the CBN has pledged to maintain adequate FX supply to meet genuine demand.
With the second quarter underway, market observers will be closely monitoring policy responses and global developments that could shape the direction of capital flows into Africa’s largest economy.