Naira gains amid 32.9% decline in weekly FX inflows

The naira appreciated across foreign exchange (FX) markets on Tuesday despite a sharp 32.9% decline in weekly FX inflows into the Nigerian Foreign Exchange Market (NFEM). This development underscores the currency’s resilience amid lower market liquidity and sustained foreign investor activity.

After Tuesday’s trading session, the naira appreciated slightly by 0.12% as the dollar was quoted at N1,463.45, representing a gain of N1.84 compared to N1,465.29 quoted on Monday at the Nigerian Foreign Exchange Market, according to data published by the Central Bank of Nigeria (CBN).

Similarly, at the parallel market, also known as the black market, the local currency gained strength over the last two weeks, appreciating by 0.67% to close at N1,485 per dollar on Tuesday, compared to N1,495 per dollar on October 11, 2025.

A report by Coronation Merchant Bank’s Research Department revealed that total foreign exchange inflows through the NFEM moderated to US$1.10 billion last week, down from US$1.64 billion recorded in the previous week, reflecting weaker inflows into the market. Despite the overall decline, foreign portfolio investors (FPIs) continued to dominate the inflow segment, accounting for 63.1% ($694.9 million) of total inflows. This was followed by exporters, who contributed 15.3%, non-bank corporates with 12.2%, the CBN with 1.3%, and other minor sources at 8.1%.

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However, foreign direct investment (FDI) inflows fell sharply to just $0.20 million, representing a mere 0.01% of total inflows compared to $122.2 million (7.5%) in the prior week. The steep decline in FDI underscores the lingering caution among long-term investors, who remain wary of Nigeria’s macroeconomic environment despite recent policy adjustments aimed at improving transparency and stability in the FX market.

The naira showed a mixed performance across various market segments last week. At the official window, the local currency depreciated by 1.37% week-on-week, equivalent to N20.18, to close at N1,475.35 per dollar, reflecting relatively low FX liquidity conditions and rising demand for dollars.

In contrast, the parallel market recorded a mild appreciation of 0.34%, or N5.00, closing at N1,490 per dollar. This movement narrowed the parallel-to-official exchange rate premium to 0.99% from 2.74% the previous week, an indication of improving convergence between both markets.

On the reserves front, Nigeria’s gross external reserves rose marginally by 0.22% week-on-week, equivalent to an increase of $92.5 million, to reach $42.68 billion. This modest gain was attributed to moderate inflows and limited outflows during the week. Analysts at Coronation Merchant Bank noted that, barring any significant external shocks or large capital outflows, the official exchange rate is expected to remain within its current bands, maintaining a broadly stable trajectory across all FX market segments in the coming days.

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.