Nigeria’s Corporate FX Inflows Surge to $1.2bn in July, Boosting Dollar Liquidity

Nigeria recorded a significant rise in foreign exchange (FX) inflows from corporates in July 2025, providing some relief to the country’s dollar supply amid sustained pressure on the naira. Data from FMDQ, cited by FBNQuest Merchant Bank, revealed that non-bank corporates injected about $1.2 billion into the market, up from $800 million in June. Analysts attributed the growth to improved export receipts, especially from upstream oil firms, and a shift towards formal FX channels.

The increase signals stronger participation from the private sector, reflecting a measure of confidence in official windows compared to the parallel market. FBNQuest noted that corporate inflows are becoming a crucial component of Nigeria’s FX mix, supplementing volatile portfolio investments with more stable oil-linked revenues and repatriated earnings.

Overall FX inflows into Nigeria’s market climbed 24% month-on-month, reaching $3.8 billion in July, up from $3.1 billion in June. However, the figure remains well below the $6.7 billion peak recorded in May, underscoring continued volatility in currency liquidity. Foreign Portfolio Investments (FPIs) contributed the largest share, accounting for 45% of total inflows with $1.7 billion, driven by attractive carry-trade opportunities. Still, analysts warned that heavy reliance on short-term capital leaves Nigeria vulnerable to shifts in global risk appetite.

The Central Bank of Nigeria (CBN) also stepped up its interventions, selling $326 million in July compared to $183 million the previous month. While the stronger reserves position allowed more market support, interventions were insufficient to offset demand pressures. The naira still weakened by 0.13% month-on-month, closing July at N1,534/$1, as importers and investors continued to drive dollar demand.

Looking ahead, analysts expect FX inflows to remain uneven, shaped by global monetary policy and Nigeria’s domestic conditions. While sustained oil exports and private sector participation could offer some cushion, risks remain elevated. Without deeper reforms to attract long-term investments and diversify FX sources, the naira’s rebound may remain fragile, keeping volatility a persistent feature of the market.

Source: The sun