Naira Falls as Foreign Investors’ Equity Selloffs Intensify FX Demand
The Naira depreciated against the US Dollar by about 0.20% at the Nigerian Foreign Exchange Market (NFEM) on Monday, as foreign investors continue to step away from the stock market.
In its daily FX data, the Central Bank of Nigeria (CBN) reported that the official spot rate closed at N1,383.6262 per US dollar on Monday, from N1,380.9329 at the close of the trading session last week.
Transactions at the NFEM window were conducted between N1377.5000 and N1390 per dollar as hard currency scarcity stoked forex market liquidity pressures.
The CBN data showed that NFEM interbank turnover rose to $223.938 million, an increase of more than 80% from $124.215 million reported on Friday’s close.
This suggests banks booked higher international payments for clients, above the total FX supply at the official window, as improved market liquidity failed to stem the negative tide against the local currency.
In the absence of CBN FX intervention, analysts said the pressures on the naira would persist due to tight FX inflows into the official window.
Foreign investors have started pricing in a hawkish US Federal Reserve tone, which could make naira assets uncompetitive without further policy tightening. Analysts also see negative effects from the pre-election-year flight to safety, draining FX from the local market.
The Nigerian stock market has been bleeding profusely due to downbeat investor sentiment amid accelerating inflation ahead of the 2027 election spending.
Citing pre-election spending, economists and Broadstreet analysts told MarketForces Africa that Nigeria should kiss lower inflation and interest rates goodbye for now. Foreign investors are also weighing the risk of keeping hot money in the local markets.
A recent report from the Nigerian Exchange showed that foreign portfolio investment (FPI) activity weakened in May 2026, declining by 25.9% month-on- month to ₦183.6 billion (US$133.7 million) from ₦247.8 billion (US$180.2 million) in April.
This marked the second consecutive monthly decline in foreign participation this year, CSL Stockbrokers Limited said in a note. NGX revealed that FPI transactions accounted for 9.5% of total market turnover, down from 13.7% in the previous month.
Despite a slowdown in foreign activity, total market turnover rose to ₦1.9 trillion, or US$1.4 billion, in May, up from ₦1.8 trillion, or US$1.3 billion, in April, supported by stronger domestic participation.
Domestic investor transactions increased by 13.2% month-on-month to ₦1.8 trillion (US$1.3 billion), up from ₦1.6 trillion (US$1.1 billion) in April. As a result, domestic investors accounted for 90.5% of total market activity, compared with 86.3% in the preceding month.
Despite intermittent profit-taking and short-term sell pressures, the Nigerian equities market has remained resilient in 2026. Market performance continues to be supported by robust corporate earnings, ongoing policy reforms across key sectors, and a steady pipeline of market-moving developments.
In its commentary note, CSL Stockbrokers Limited said investor sentiment is expected to benefit from the anticipated reclassification of Nigerian equities into the FTSE Russell Frontier Market Index by September 2026, as well as the potential listing of Dangote Refinery on the NGX. Naira Falls as Nigeria’s Bonny Light Crude Plunges by 11%
