FX inflows triple as dollar supply surge fuels naira rally

Nigeria’s foreign exchange market recorded a significant improvement in January 2026, with net foreign exchange inflows tripling to $9.22 billion as stronger dollar supply, lower outflows and increased market activity supported the naira and boosted external reserves.

Data from the Central Bank of Nigeria (CBN) showed that aggregate foreign exchange inflows rose by 45.24 percent, to $12.23 billion in January from $8.42 billion in December 2025, while total outflows declined, resulting in a net inflow of $9.22 billion, three times more compared with $3.11 billion in the previous month.

The increase was driven by both official and autonomous sources. Foreign exchange inflow through the CBN rose to $4.66 billion from $3.69 billion in December, while autonomous inflows climbed to $7.57 billion from $4.73 billion.

At the same time, foreign exchange outflows moderated across both channels. Outflows through the CBN declined to $1.57 billion from $3.04 billion in December, while autonomous outflows fell to $1.44 billion from $2.28 billion.

As a result, the apex bank recorded a net inflow of $3.09 billion, significantly higher than the $660 million recorded in the preceding month. Net inflows through autonomous sources also increased sharply to $6.14 billion from $2.45 billion in December.

The improvement in dollar liquidity coincided with a stronger performance by the naira at the Nigerian Foreign Exchange Market (NFEM).

The monthly average exchange rate appreciated by 2.43 percent to N1,416.52 per dollar in January 2026 from N1,450.97 per dollar in December. Similarly, the end-of-period exchange rate strengthened to N1,386.55 per dollar compared with N1,435.76 per dollar at the end of the previous month.

Market activity also accelerated during the period, with average daily turnover at the NFEM rising by 55.28 percent to $587.62 million from $378.42 million in December, reflecting improved liquidity and stronger participation in the market.

The stronger inflow position also supported the country’s external reserves, which rose to $48.88 billion in January from $45.75 billion in December 2025. According to the CBN, the reserve level was sufficient to cover 8.93 months of imports of goods and services, well above the international benchmark of three months.

On the demand side, foreign exchange utilisation moderated during the review period, largely due to a decline in invisible imports.

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Total sectoral foreign exchange utilisation fell by 25.03 percent to $3.40 billion from $4.54 billion in December.

Visible imports accounted for $1.86 billion, representing 52.65 percent of total utilisation, while invisible imports stood at $1.54 billion.

Within visible imports, the industrial sector remained the largest consumer of foreign exchange, accounting for 38.87 percent of utilisation. Manufactured products followed with 22.36 percent, while oil imports and food products accounted for 19.95 percent and 12.23 percent respectively. Transport represented 4.57 percent, while minerals and agriculture accounted for 1.55 percent and 0.47 percent.

For invisible imports, financial services dominated foreign exchange demand, accounting for 93.11 percent of total invisible import utilisation. Transport services represented 2.87 percent, business services 2.71 percent, and communication services 0.99 percent, while other services made up the balance.

Capital outflows also moderated during the period, helping to strengthen the country’s external position.

Total capital outflow declined to $1.63 billion in January from $1.77 billion in December, reflecting lower loan repayments and dividend repatriation.

Loan repayments fell by 31.25 percent to $440 million, while dividend repatriation dropped sharply by 98.10 percent to $10 million compared with the previous month.

However, capital transfers increased by 59.45 percent to $1.18 billion, making up 72.25 percent of total capital outflows. Loan repayments accounted for 27.29 percent, while dividend repatriation constituted the balance.

Sectoral analysis showed that the banking sector accounted for the largest share of capital outflows at 41.84 percent. The financing sector followed with 33.03 percent, while oil and gas accounted for 20.82 percent. Agriculture represented 1.91 percent and production and manufacturing accounted for 0.71 percent, with other sectors contributing the remainder.

The January figures underscore a broad-based improvement in Nigeria’s external sector, with stronger foreign exchange inflows, lower outflows, rising reserves, higher market turnover and a firmer naira pointing to improved liquidity conditions in the foreign exchange market.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.