Nigeria’s foreign exchange (FX) market experienced a significant revival in May 2025, as total inflows rose sharply by 62% month-on-month to $5.96 billion, up from $3.67 billion in April. This surge is attributed to renewed interest from both domestic and foreign investors, reflecting growing confidence in the market amid ongoing macroeconomic reforms and a relatively stable naira. It marks the highest FX inflow seen in recent months and signals positive momentum for the country’s external sector.
Data from the FMDQ shows that domestic sources were the primary drivers of this growth, contributing a hefty 83.2% of total inflows. Foreign sources also improved, accounting for 16.8% of the total. However, inflows from the Central Bank of Nigeria (CBN) dropped significantly to $649.8 million from $1.35 billion in April. This underscores the CBN’s strategy of pulling back from dominating the FX market and allowing more market-driven liquidity to prevail.
On the foreign side, inflows rose by 51.7% month-on-month to reach $997.6 million—the highest in three months. Much of this growth came from foreign portfolio investments (FPI), which surged by 61.3% to $880.8 million. Corporate investments also saw a 10% increase, while foreign direct investment (FDI) slipped slightly by 6.3% to $32.9 million. Analysts remain cautiously optimistic that these trends will continue, although global uncertainties could still pose a challenge.
Complementing the FX inflow data, the CBN’s Purchasing Managers’ Index (PMI) indicated continued expansion in economic activity for the sixth straight month, albeit with a slight drop to 52.1 in May from 52.2 in April. This marginal decline was attributed to a slowdown in sectors such as agriculture, industry, and services. Despite the dip, the figures still point to sustained, if moderate, growth across key economic sectors.
Analysts from Cordros Securities remain optimistic about Nigeria’s private sector outlook, citing stabilizing macroeconomic indicators such as the naira and inflation. Nonetheless, they caution that tight financial conditions and lingering global trade uncertainties may limit the pace of future gains in both FX inflows and overall economic performance.
Source: This day