Nigeria’s foreign-exchange (FX) market recorded a remarkable rebound in October, reaching a five-month high as both foreign and domestic investors increased activity. Total inflows jumped 62.2% month-on-month to $5.15 billion, the highest since May, according to FMDQ data. Analysts attribute the surge to improving market sentiment and expectations of global monetary policy easing.
Foreign investors were the main contributors to the upswing, with inflows rising 89.7% to $3.32 billion, accounting for nearly 65% of total market liquidity. A significant driver was the return of portfolio investors, whose inflows soared 120.7% compared to September, reflecting a renewed appetite for Nigerian assets. Higher receipts from other corporate participants, up 30.5% month-on-month, also helped offset a 25.5% drop in Foreign Direct Investment (FDI) inflows.
Local market participation also strengthened, albeit at a slower pace. Domestic inflows rose 28.4% month-on-month, representing 35.5% of total FX liquidity. Individual investors stood out with a 370.6% surge, one of the most significant monthly jumps this year. Corporates and exporters contributed positively as well, with inflows up 30.8% and 7.2%, respectively, while the Central Bank of Nigeria (CBN) reduced direct market intervention, with inflows falling 59.6%.
The October surge reflects ongoing efforts by Nigerian authorities to attract foreign capital and stabilize the FX market after months of volatility. Measures such as easing official window restrictions, clearing FX backlogs, and allowing greater rate flexibility have improved transparency and liquidity, making Nigeria more attractive to investors seeking higher returns.
Looking ahead, experts predict that FX inflows will remain robust, surpassing the 2024 year-to-date average of $2.51 billion. Sustained investor confidence, portfolio rebalancing, and policy stability are expected to support continued growth. While inflation and currency volatility remain potential risks, October’s performance is a positive signal that Nigeria’s FX market is regaining resilience.
source: The sun