Total foreign exchange inflows into the Nigerian Foreign Exchange Market declined by 23.3 per cent month-on-month to $5.12 billion in September 2026, reflecting reduced dollar supply from both domestic and foreign sources.
Data attributed to FMDQ showed that inflows fell from $6.68 billion recorded in August, representing a reduction of approximately $1.56 billion.
The decline highlights the continuing importance of foreign investment, export earnings and domestic foreign exchange supply to the stability of Nigeria’s currency market.
Both domestic and foreign sources recorded lower inflows during the period, although foreign sources continued to account for the larger share.
Domestic FX Inflows Fall to Three-Month Low
Domestic foreign exchange inflows declined by 31.3 per cent to $2.06 billion in September, compared with $3 billion in August.
The figure represented the lowest domestic inflow level in three months.
Domestic sources accounted for 40.2 per cent of total market inflows during the period.
A breakdown showed that inflows associated with the Central Bank of Nigeria declined by 52.2 per cent.
Inflows from individuals fell by 45.8 per cent, while non-bank corporate inflows decreased by 23.2 per cent.
The exporters and importers segment also recorded an 18.6 per cent reduction.
The widespread decline indicates that the weakness was not concentrated in a single domestic market segment.
Foreign Investment Inflows Also Decline
Foreign exchange inflows from international sources fell by 16.9 per cent to $3.06 billion, compared with $3.68 billion in August.
Foreign sources accounted for 59.8 per cent of total inflows.
The decline was driven partly by an 18.1 per cent reduction in foreign portfolio investment inflows.
Foreign direct investment inflows also dropped by 58.3 per cent.
These reductions outweighed a 43 per cent increase in inflows from the other corporate segment.
The data suggest that international capital participation remained an important but variable source of foreign exchange liquidity.
Why Portfolio Investment Matters
Foreign portfolio investors purchase financial assets such as government securities and listed equities.
Their participation can increase the supply of foreign currency when investors bring funds into Nigeria.
However, portfolio investment is sensitive to changes in interest rates, exchange rate expectations and global financial conditions.
Investors may reduce exposure to markets where returns become less attractive relative to perceived risks.
Lower domestic yields could therefore affect foreign portfolio participation, particularly if interest rates remain elevated in other major economies.
Direct Investment Records Sharp Contraction
The 58.3 per cent decline in foreign direct investment inflows is another important development.
Foreign direct investment generally involves longer-term business interests, such as investments in companies, facilities or productive operations.
Unlike portfolio flows, direct investment decisions are often influenced by business opportunities, regulatory conditions, infrastructure and long-term economic expectations.
A single month’s decline does not establish a permanent deterioration in investment sentiment.
Nevertheless, the reduction highlights the importance of maintaining conditions that encourage sustained capital commitments.
FX Liquidity Remains Important for Businesses
Foreign exchange availability affects Nigerian businesses that require imported machinery, raw materials, technology equipment and other international purchases.
Reduced inflows can increase pressure on market liquidity, particularly when demand remains strong.
However, lower inflows do not automatically imply an immediate depreciation of the naira.
Exchange rate movements also depend on demand, central bank interventions, reserves and broader market expectations.
Outlook Depends on Capital Flows
The near-term outlook will depend on the recovery of domestic inflows and the resilience of foreign portfolio participation.
Persistent geopolitical tensions and changes in global interest rates could influence investment decisions.
For Nigeria, attracting stable foreign exchange inflows remains important to supporting trade, investment and currency market stability.
The September decline reinforces the need to strengthen export earnings, encourage long-term investment and maintain confidence in the foreign exchange market.
