Naira flat as weekly FX inflows decline by 15.7%

The naira on Monday closed flat across the foreign exchange (FX) markets as weekly inflows declined by 15.7 percent, reflecting weaker foreign exchange supply conditions and mild pressure on the local currency.

Data released by the Central Bank of Nigeria (CBN) showed that the naira depreciated slightly by 72 kobo, with the dollar quoted at N1,437.29 on Monday compared to N1,436.57 recorded on Friday at the Nigerian Foreign Exchange Market (NFEM).

In the parallel market, also known as the black market, the naira weakened against the dollar, closing at N1,460 per dollar on Monday, a loss of N5 from N1,455 on Friday. Traders attributed the decline to a drop in market liquidity as inflows slowed.

According to a report by Coronation Merchant Bank’s research department, foreign exchange inflows through the NFEM fell to $899.20 million, representing a 15.7 percent decline compared to $1.04 billion recorded in the previous week. The report noted that the moderation in inflows was mainly due to reduced participation from foreign investors and corporates.

Foreign Portfolio Investors (FPIs) remained the dominant source of inflows, contributing 60.13 percent (about $540.70 million) of total market liquidity. They were followed by Non-Bank Corporates, which accounted for 13.99 percent, Individuals (12.75 percent), and Exporters (12.56 percent), while other sources made up the remaining 0.56 percent.

According to the report, the weaker inflows coincided with the naira snapping its two-week appreciation streak. The official exchange rate depreciated by 1.03 percent week-on-week to close at N1,436.58 per dollar. Similarly, the parallel market rate weakened by 1.71 percent week-on-week, settling at N1,465 per dollar. Consequently, the premium between the official and parallel market rates widened to N28.42 per dollar, up from N18.27 per dollar in the previous week.

On the reserves front, Nigeria’s gross external reserves rose marginally by 0.29 percent week-on-week, equivalent to an increase of $127.10 million, to close at $43.32 billion as of October 6, 2025. The modest gain was supported by recorded inflows of $899.20 million and relatively lower outflows of $822.60 million during the review period.

Analysts at Coronation Merchant Bank expressed cautious optimism about the near-term outlook for the local currency. “In the near term, the naira is expected to remain below the N1,500 per dollar mark, supported by steady foreign portfolio inflows into the fixed-income market and improved market liquidity,” the analysts said.

They, however, warned that sustaining stability in the FX market would depend on continued reforms by the CBN, active participation of investors, and consistent efforts to build external reserves amid global economic headwinds.

Market participants also noted that the moderation in inflows could be temporary, as upcoming Eurobond proceeds and seasonal remittances may strengthen liquidity in the coming weeks.

Despite the naira’s flat close, analysts said the current dynamics underscore the sensitivity of Nigeria’s FX market to foreign investment trends, global risk sentiment, and local policy outcomes. With foreign portfolio investors maintaining a strong presence, market watchers expect exchange rate movements to remain largely influenced by the pace of external inflows and central bank interventions in the weeks ahead.