Nigeria’s local currency, the naira, continued its upward streak in the foreign exchange market last week, supported by a significant increase in foreign currency inflows. According to data, inflows surged by about 74%, further strengthening the naira’s rally against the US dollar.
Despite lower FX sales interventions by the Central Bank of Nigeria (CBN), the increased supply of dollars in the system from other sources bolstered the naira’s performance. By Friday’s close, the naira had appreciated by ₦10.67, settling at ₦1,528.56/$1 in the official window.
The positive momentum was largely driven by foreign portfolio investments (FPIs), non-bank corporates, and exporters. The naira briefly touched ₦1,525.82 per dollar on Thursday, reflecting one of its strongest showings in recent weeks.
Coronation Merchant Bank’s weekly commentary revealed that foreign exchange inflows into the Nigeria Forex Market reached $1.79 billion last week, a steep climb from $1.03 billion in the preceding week. FPIs accounted for the lion’s share of the inflows at 66.91%, maintaining a seven-week streak of dominance in the market.
Non-bank corporate players contributed 16.51% to the weekly total, while exporters provided 14.50%. Smaller contributors included other corporate entities and individual remittances, which added 0.82% and 0.12%, respectively.
Analysts have raised concerns that the resumption of international card transactions by commercial banks could exert short-term pressure on the naira. However, Coronation’s outlook remains positive, citing continuous inflows from FPIs and increased FX supply from exporters and corporates as stabilizing forces.
The International Monetary Fund (IMF) also lent support to the naira’s outlook in its latest Article IV Consultation report. The IMF praised the CBN’s foreign exchange market reforms, noting that improvements in market transparency and price discovery have enhanced investor confidence and liquidity conditions.
