Nigeria’s foreign exchange market received a strong boost in February as dollar inflows surged to $4.37 billion, driven by fresh injections from the Central Bank of Nigeria and increased participation from foreign portfolio investors.
Data released by FMDQ Securities Exchange over the weekend showed that total dollar inflows into the Nigerian Foreign Exchange Market (NFEM) rose 45.4 per cent compared to January, marking the highest level in about four months.
Domestic sources contributed significantly, accounting for roughly 52 per cent of the total inflows. Local dollar supply jumped to $2.28 billion in February from $1.23 billion in January, largely due to stronger intervention by the Central Bank of Nigeria aimed at improving liquidity and supporting trading.
Individuals, exporters, importers, and non-bank companies all increased their foreign exchange contributions, with individuals showing the sharpest growth.
Foreign investors also stepped up, though more moderately than domestic players. International inflows rose to $2.09 billion from $1.79 billion in January, representing about 48 per cent of total inflows. The increase was driven primarily by foreign portfolio investors (FPIs) investing in Nigerian stocks and government debt instruments.
Within portfolio investments, equities recorded the strongest growth, jumping more than 70 per cent, reflecting renewed foreign interest in the Nigerian stock market. Fixed-income investments, such as government bonds, also rose by about 21 per cent, reflecting continued demand for Nigeria’s relatively high-yielding debt instruments.
However, not all foreign investment channels improved. Inflows from foreign companies declined by 25 per cent, while foreign direct investment (FDI), typically involving long-term investments in factories and infrastructure, fell by 21 per cent. Analysts say this indicates that short-term investments are recovering faster than long-term commitments.
Financial analysts note that the surge in dollar inflows underscores the impact of central bank measures and renewed foreign investor interest on improving liquidity in Nigeria’s foreign exchange market.
“While global economic uncertainties may temper foreign inflows in the near term, the combination of central bank support and rising portfolio investments is helping to stabilise the market and increase dollar availability,” analysts at Cordros Capital observed.
The recent developments suggest cautious optimism for the naira and the broader foreign exchange ecosystem, even as global conditions remain unpredictable.
