Nigeria’s forex inflows dip as global uncertainty bites

Onome Amuge

Foreign exchange inflows into the Nigerian Foreign Exchange Market (NFEM) slowed in April, reflecting the dampening effect of ongoing global trade tensions and broader economic uncertainties on foreign investor appetite, according to data from FMDQ.

Total forex inflows declined by 5.7 per cent month-on-month to $3.67 billion, down from $3.90 billion in March. The primary driver of this downturn was a sharp 16.5 per cent drop in foreign-sourced inflows, which fell to a seven-month low of $657.4 million amid heightened volatility in global trade and capital flows.

Foreign Portfolio Investments (FPI) witnessed a contraction of 15.7 per cent, while inflows from other corporates slumped by 40.5 per cent. In contrast, Foreign Direct Investment (FDI) provided a degree of offset, registering a 112.7 per cent month-on-month increase.

Local sources, which accounted for 82.1 per cent of total forex inflows, also experienced a marginal 2.9 per cent decrease to $3.02bn. This decline was attributed to reduced flows from exporters/importers (-23.9 per cent) and non-bank corporates (-23.3 per cent), despite increases in inflows from individuals (+125.4 per cent) and the Central Bank of Nigeria (CBN) (+43.8 per cent).

Analysts at Cordros Research anticipate that overall forex inflows will remain stronger than the $2.54 billion monthly average recorded in 2024, supported by ongoing reforms implemented by the CBN. However, they cautioned that persistent external pressures could continue to constrain overall liquidity in the near term.

In the forex market itself, the naira saw an appreciation of 0.4 per cent against the dollar, closing the week at NGN1,589, buoyed by an estimated $116 million intervention from the CBN. Gross reserves also recorded a rare uptick, rising by $136 million to $37.93 billion as of April 30. Forward contracts across all tenors experienced appreciation.

Despite this temporary easing of forex pressures, market analysts warn that prevailing global uncertainty continues to pose a risk to capital inflows and the stability of the naira. Market participants anticipate that the CBN will maintain an active intervention strategy to mitigate further volatility.

Meanwhile, the overnight (OVN) rate eased slightly to 26.8 per cent as system liquidity remained healthy at N1.36 trillion, supported by bond coupon payments and limited liquidity sterilisation by the CBN. Treasury bills attracted bullish sentiment, with average yields falling by 14 basis points to 23.7 per cent. The CBN’s latest Open Market Operations (OMO) auction witnessed strong oversubscription, with N804.85bn allotted from N1.06 trillion in bids.

However, the bond market exhibited bearish trading at the short end of the curve, reflecting persistent cautious sentiment. Average yields edged up by 2 basis points to 19.0 per cent, with the JAN-2026 bond experiencing a notable sell-off.