Nigeria’s foreign exchange market recorded a significant boost in July, as total forex inflows climbed to a five-month high of $4.36 billion, driven largely by aggressive Central Bank interventions and a remarkable surge in domestic participation.
According to the latest data released by FMDQ, this represents a 31.9 per cent month-on-month increase from the $3.31 billion recorded in June, signalling a potential turning point for the country’s currency market.
The data revealed that local sources were the primary engine of this growth, accounting for 66.7 per cent of total market inflows during the period. Inflows from domestic channels rose steeply by 79.8 per cent to $2.91 billion in July, from $1.62 billion in the previous month.
The report attributed this sharp rise to a dramatic expansion in Central Bank of Nigeria (CBN) interventions, which grew by approximately 11.8 times month-on-month. Non-bank corporates also played a vital role, with their contributions increasing by 31.9 per cent.
However, the gains from domestic sources were not uniform. Inflows from individuals declined sharply by 54 per cent, while exporters’ contributions also fell by 12.9 per cent during the period under review, partially offsetting the overall positive momentum.
In contrast, foreign sources painted a more subdued picture. Inflows from international investors weakened by 13.9 per cent to $1.45 billion, down from $1.69 billion in June. This decline was driven largely by softer foreign portfolio investment (FPI), which dropped by 18.5 per cent, reflecting a 53.2 per cent collapse in equity investments and a 16.1 per cent reduction in fixed income instruments. Other corporate investors also reduced their exposure, with inflows falling by 48.4 per cent.
FDI Rebound
Nevertheless, there was a bright spot on the foreign front: foreign direct investment (FDI) staged a remarkable rebound, soaring by 388.3 per cent during the month. This surge helped cushion the broader decline in foreign inflows and underscored continued long-term investor interest in key sectors of the Nigerian economy.
Despite higher overall market liquidity, strong local demand continued to weigh on the naira. At the close of last week, the domestic currency depreciated by 0.5% week-on-week to close at N1,369.09/$. The pressure was further reflected in Nigeria’s gross external reserves, which recorded their first weekly decline in three months, falling by $107.73 million to $51.92 billion as of July 30, 2026.
The currency also weakened across most forward contracts. The one-month forward rate depreciated by 0.2 per cent to N1,392.17 per dollar, while the three-month and six-month contracts declined by 0.5 per cent and 0.1 per cent to N1,430.46 and N1,484.50 per dollar, respectively. The one-year forward contract remained unchanged at N1,592.05 per dollar.
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Looking ahead, analysts at Cordros Research struck a cautiously optimistic tone. They expect the naira to remain broadly stable in the near term, supported by resilient portfolio inflows, sustained investor confidence, and Nigeria’s widening current account surplus. They also projected that foreign exchange inflows from both local and foreign sources would remain resilient, backed by continued market confidence and attractive carry trade opportunities.
However, they cautioned that lingering global uncertainties—particularly geopolitical tensions—could keep foreign investors on edge and moderate the pace of growth in foreign exchange liquidity.
For now, the July data offers a welcome respite, but the sustainability of this recovery will depend on how effectively the CBN balances intervention with market-driven forces in the months ahead.
Victor Ezeja is a Nigerian journalist skilled in producing insightful news analyses, feature stories, and interviews that simplify complex issues and drive informed public discourse. His work combines rigorous research, balanced reporting, and compelling storytelling to highlight developments shaping industries and society. Victor, who holds a Master's Degree in Mass Communication, specializes in energy, aviation, business, and economic reporting. He can be reached via @VICTOREZEJA on X