Dollar inflows into Nigeria’s foreign exchange (FX) market witnessed a significant contraction last week, as liquidity conditions tightened and the naira weakened against the greenback.
The local currency depreciated by ₦1.70 to close at ₦1,530.26 per dollar at the official FX window, reversing a recent upward trend. Analysts said the naira’s drop was triggered by reduced supply of FX and rising outflows from domestic entities such as importers and non-bank corporates.
Despite the decline in the official market, the naira appreciated in the parallel market, gaining 0.97% to close at ₦1,545 per dollar. The appreciation was linked to easing pressures following policy changes that allowed the use of naira debit cards for international online transactions.
Research from Coronation Merchant Bank revealed that FX inflows slumped to $749.8 million last week, down from $1.76 billion the previous week, marking a sharp 57.4% drop. This steep reduction reflects a recalibration in global FX flows and domestic demand pressure.
Foreign portfolio investors (FPIs) dominated inflows for the eighth straight week, accounting for 46.13% of total volume. Non-bank corporates contributed 33.68%, while exporters made up 18.45%. Local individuals and international corporate inflows remained negligible at 0.93% and 0.66%, respectively.
However, Nigeria’s external reserves rose by $173.88 million (or 0.47%) to $37.36 billion, reversing a prior week’s $138.30 million decline, according to the Central Bank of Nigeria (CBN).
Analysts at Coronation Research anticipate that exchange rate pressures will remain manageable in the near to medium term, buoyed by consistent foreign portfolio investments and CBN intervention strategies.
The recent resumption of international transactions on naira debit cards is unlikely to destabilize the market, given the robust structure and participation at the official FX window.
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