Nigeria’s FX Market Soars with $5.96bn Boost, Driven by Local Export and Import Surge

Nigeria’s foreign exchange market witnessed a major uplift in May 2025, with total inflows jumping by 62% month-on-month to reach $5.96 billion, up from $3.67 billion in April. The surge, as reported by FMDQ Exchange, was largely fueled by domestic contributions, which accounted for over 83% of the total. This indicates a strong resurgence in market-driven FX supply, particularly from exporters, importers, and other local players responding to ongoing reforms.

Local FX inflows reached a six-year high, increasing by 64.2% to $4.96 billion. Exporters and importers alone drove $3.11 billion into the system—almost five times the $655.7 million recorded in April. Additionally, non-bank corporate inflows rose slightly to $1.11 billion, and individual contributions spiked to $91.4 million, showcasing growing public participation in the FX market.

In contrast, the Central Bank of Nigeria (CBN) reduced its FX interventions significantly, injecting $649.8 million in May compared to $1.35 billion in April. This strategic move highlights the CBN’s shift toward encouraging a private-sector-led supply model, reducing reliance on central bank liquidity and fostering a more autonomous exchange ecosystem.

On the international front, foreign inflows also increased by 51.7% to $997.6 million, the highest since February. Foreign portfolio investors (FPIs) were the key drivers, with their inflows rising by 61.3% to $880.8 million. Despite this momentum, foreign direct investment (FDI) dipped 6.3% to $32.9 million, indicating some continued investor hesitance around long-term economic stability.

Looking ahead, analysts predict sustained improvement in FX inflows, buoyed by investor confidence, export growth, and government-led liberalization efforts. However, they caution that external economic factors—such as commodity prices and global interest rates—could temper gains and maintain a level of volatility in the FX market.

Source: The Sun