The Nigerian naira depreciated against the U.S. dollar, closing at N1602, amid a reported 6% drop in total foreign exchange inflows in April. Trading activities on the Nigerian Foreign Exchange Market (NFEM) showed transaction ranges between N1580 and N1603.50, with the final rate settling at N1602.18. This reflects a modest depreciation of 16.5 basis points compared to the N1599.54 rate at the start of last week’s trading.
The Central Bank of Nigeria (CBN) made multiple interventions during the week, injecting approximately $116 million in total across various sessions. According to AIICO Capital Limited, subdued demand for foreign exchange and moderate foreign portfolio inflows contributed to a relatively stable exchange environment.
An early-week injection of $50 million by the apex bank drove interbank rates to a low of N1596. Improved market liquidity and reduced rate volatility helped maintain a soft NAFEX fixing. Meanwhile, the nation’s foreign reserves rose by $135.9 million to reach $37.93 billion.
Data from the FMDQ platform revealed that total forex inflows into Nigeria dropped by 5.7% month-on-month, from $3.90 billion in March to $3.67 billion in April.
Cordros Capital Limited analysts attributed the downturn to a sharp 16.5% decrease in foreign inflows, which fell from $787.20 million in March to $657.40 million in April — the lowest level recorded in seven months.
Accordingly, inflows from foreign portfolio investors and other corporate participants saw significant declines, although direct foreign investment showed positive momentum. Inflows from corporates contracted by 40.5%, while foreign portfolio investments dropped by 15.7%. Conversely, capital from direct foreign investors surged by 112.7%.
Local inflows also experienced a slight dip of 2.9%, totaling $3.02 billion compared to $3.11 billion in the previous month. This was primarily driven by a 23.9% month-on-month reduction from exporters and importers, and a 23.3% decline from non-bank corporates. On the other hand, individual inflows surged by 125.4%, and CBN-related inflows rose by 43.8%.
Cordros Capital anticipates that foreign exchange inflows will remain relatively stronger than last year due to structural improvements in the market and enhanced CBN participation. Nevertheless, they warned that prevailing external factors such as global trade disputes and economic uncertainties could continue to hamper foreign capital inflows, affecting overall forex liquidity.
In the forwards market, the naira appreciated across various contracts as earlier pressure from heightened demand began to recede.
Specifically, the 1-month forward rate appreciated by 0.2% to N1,646.57 per dollar. The 3-month contract rose 0.6% to N1,724.19, while the 6-month rate climbed 0.5% to N1,837.00. Additionally, the 1-year forward rate gained 0.9%, reaching N2,056.24.
Market analysts noted that although demand-side pressures in the foreign exchange market have moderated, the risk environment remains fragile due to persistent global instability, which may continue to obstruct capital inflows in the near term. FX liquidity is expected to remain below optimal levels, thereby sustaining pressure on the naira and potentially prompting further interventions by the central bank.
Meanwhile, oil prices posted their largest weekly decline since late March. U.S. West Texas Intermediate (WTI) crude futures dropped by 95 cents or 1.6%, settling at $58.29 per barrel. Brent crude prices also fell, shedding 84 cents or 1.4% to end the week at $61.29 per barrel. The declines were attributed to investor caution ahead of an anticipated OPEC+ meeting that will outline production policy for June.
In precious metals, gold prices recorded a second consecutive weekly loss, influenced by easing tensions between the U.S. and China and robust employment data out of the United States.
