Exporters and Non-Bank Corporates Lead Nigeria’s Dollar Inflows as Naira Weakens

Exporters and non-bank corporates were the main contributors to Nigeria’s dollar inflows, accounting for 64% of the total inflow into the Nigerian Foreign Exchange Market (NFEM) last week. The total inflow stood at $1.0 billion, marking a 25.4% decline from the previous week. In comparison, the Central Bank of Nigeria (CBN) and Foreign Portfolio Investors (FPIs) contributed 14.29% and 18%, respectively. Non-bank corporates contributed 35.55%, while exporters accounted for 28.06% of the inflows, with other sources making up 4.10%.

Despite a decline in the total dollar inflow, the data highlighted the crucial role of exporters and non-bank corporates in stabilizing the FX market. Non-bank corporates include various businesses such as manufacturers, retailers, and tech firms that participate in activities like borrowing, lending, and investing outside the traditional banking sector. This sector’s strong contribution reflects its significant economic role despite global volatility.

Meanwhile, the Nigerian naira continued to weaken slightly, closing at N1,517.93/$1 in the official market, marking a 0.05% drop. The parallel or black market saw the naira close at N1,580, a N5 loss compared to earlier in the week. The foreign reserves increased slightly by 0.03%, ending the week at $38.36 billion. Additionally, the naira also lost marginally against the Chinese Yuan, closing at N209.67 CNY/N.

The CBN’s reforms, such as the introduction of the Electronic Foreign Exchange Matching System (EFEMS) and the Bloomberg BMatch system, have fostered greater market transparency and reduced speculation. These policies are seen as vital in stabilizing the FX market, improving demand-supply information, and bolstering investor confidence, helping to ensure that exchange rates reflect more realistic market conditions.

source: business day