US Dollar Inflows into Nigerian FX Market Declines by 27%
Aggregate U.S. dollar inflows into Nigerian foreign exchange (FX) market fell by about 27% month on month in August 2025 driven by slacked supply by offshore investors in the local economy. Inflows from foreign portfolio investors (FPIs) into the forex market fell by 64% in August to $1.06 billion, according data from the FMDQ cited by analysts.
The report highlighted that US dollar inflow declined despite successive open market operations conducted by the Central Bank of Nigeria (CBN) to replaced expired OMO bills. Offshore positioning in the market remained strong, according to some Broadstreet analysts who think attractive yields in the fixed income market would continue to keep foreign investors at ease.
Despite disinflation, the authority has continued to use higher rates to attract local and foreign investors’ attentions. Inflation rate is anticipated to decline further as the market awaits the release of the release of the consumer price index in the coming days.
According to FMDQ data, total inflows into the Nigerian Foreign Exchange Market (NFEM) fell by 26.9% to USD2.80 billion in August from USD3.83 billion in July. Analysts at Cordros Capital Limited said the decline in aggregate inflow reflected declines across both foreign and local sources.
Foreign inflows accounted for 38% of total fx inflows, while local contribution made up 62%, details from analysts note revealed. Analysts highlighted that foreign inflows dropped to a four-month low of USD1.06 billion, representing a 61.0% drop on July record, driven largely by weaker participation from foreign portfolio and direct investors.
Portfolio inflows from foreigners fell by -65.8% in August and foreign direct investors’ inflows reduced by 25.2%. These declined were partly cushioned by higher accretion from other corporates, which surged by 165.5% in August, according to FMDQ report.
On the domestic front, inflows contracted by 17.9% to USD1.74 billion. This was triggered by 32.8% month on month reduction in total exporters/importers inflows. US dollar volume supplied by non-bank corporates also fell by 32.7% in the same period. These declined outweighed sharp increases from individuals, and the Central Bank.
Individuals’ sources for FX inflows rose by +413.8% last month, and the CBN boosted FX supply by +118.9%. “In the near term, we expect foreign exchange inflows from both local and foreign sources to remain strong, surpassing average of USD2.51 billion in 2024, driven by improving market confidence and still-attractive naira yields for foreign portfolio investors”, Cordros Capital Limited said in its note.
Elsewhere, total turnover in the FX derivatives segment in July 2025 was $1.33 billion, up by 3.80% from June 2025 figures of $1.29 billion, according to FMDQ data. The increase in the FX derivatives turnover was driven by the 12.26% ($0.14bn) increase in FX Swaps transactions offsetting the 90.36% ($0.10) decrease in FX Forwards transactions during the review period.
In the Cleared Naira-Settled (USD/NGN) Non-Deliverable Forwards market, the near month contract expired with no open positions settled during the period. No new far month (60M) contract was introduced in the Cleared Naira-Settled Non-Deliverable Forwards market in the review period, continuing the trend since August 2024. #US Dollar Inflows into Nigerian FX Market Declines by 27% Nigerian Exchange Stages Compelling Performance, Rides on Historic Highs
