Domestic foreign exchange supply more than doubles to $5.11bn, while net foreign outflows of $1.41bn highlight continuing liquidity and exchange-rate pressures.
Foreign exchange inflows into Nigeria’s official foreign exchange market increased significantly in October, rising by 61.7 per cent month-on-month to $8.28 billion from $5.12 billion recorded in September, largely supported by a substantial increase in domestic FX supply.
Data from FMDQ showed that domestic sources accounted for 61.7 per cent of total inflows during the period, while foreign sources contributed the remaining 38.3 per cent.
Domestic foreign exchange inflows more than doubled, increasing by 148.1 per cent to $5.11 billion from $2.06 billion in September, reflecting stronger contributions from the Central Bank of Nigeria (CBN), individuals, exporters and importers, as well as non-bank corporate entities.
CBN-related inflows recorded the strongest increase, rising by 421.7 per cent month-on-month, while contributions from individuals increased by 74.0 per cent.
Similarly, inflows from exporters and importers rose by 71.5 per cent, while non-bank corporates recorded an increase of 55.5 per cent.
The stronger domestic contributions helped drive the overall increase in foreign exchange supply, providing additional liquidity to the Nigerian Foreign Exchange Market (NFEM).
However, the improvement in gross inflows was accompanied by a reversal in foreign exchange flows from international participants.
The market recorded net foreign outflows of $1.41 billion in October, compared with net foreign inflows of $1.03 billion in September, indicating increased foreign currency withdrawals relative to fresh inflows.
The development could place additional pressure on the market’s supply-demand balance and potentially require greater intervention by the CBN to maintain liquidity and limit exchange-rate volatility.
Despite the net outflows, gross foreign FX inflows increased by 3.5 per cent to $3.17 billion from $3.06 billion in September.
The increase was supported by stronger contributions from foreign portfolio investors, whose inflows rose by 3.4 per cent, and foreign direct investment, which recorded a substantial 227.3 per cent increase.
These gains, however, were partly offset by an 11.8 per cent decline in inflows from other foreign corporate entities.
The October performance highlights the growing contribution of domestic sources to Nigeria’s foreign exchange market, even as net foreign outflows indicate that external liquidity conditions remain subject to changing investor sentiment.
Looking ahead, FX liquidity is expected to remain relatively robust, supported by continued foreign investor interest in naira-denominated assets and attractive domestic yields despite their recent moderation.
Nevertheless, geopolitical uncertainties and changes in global risk appetite could trigger intermittent volatility in foreign investment flows.
The CBN is also expected to remain active in the market, deploying interventions where necessary to address temporary supply-demand imbalances, moderate exchange-rate pressures and preserve relative stability in the naira.
