Naira Appreciates As FX Inflows Improve, Analysts Send Warnings
- New data shows that foreign exchange inflows into Nigeria rose in July 2025 to about $3.8 billion compared to the previous month
- Gross external reserves also increased by $431.9 million to $40.72bn as of mid-August, supported by the steady inflows
- Analysts warned that Nigeria’s dependence on FPI flows leaves the market vulnerable to external shocks
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The value of the naira has appreciated in the black market following an increase in foreign exchange inflows from different sources into the country
According to data from FBNQuest, total forex inflows rose 24% month-on-month to about $3.8 billion in July from $3.1 billion in June.
Source: Getty Images
It noted, however, that it is still well below the $6.7 billion peak in May 2025.
Breakdown of inflows into Nigeria
Although FPIs remained the largest source overall, accounting for 45% of the month’s inflows, with offshore investors contributing $1.7 billion.
Also, Weekly figures from Coronation Merchant Bank showed non-bank corporates led supply with $227.4 million, ahead of exporters ($179.6 million), the central bank ($171.2m) and FPIs ($167.4m).
Analysts attributed the rise to repatriated profits by upstream oil producers and improved access to official FX channels.
FMDQ data revealed that in the latest FX inflow, non-bank corporates overtook foreign portfolio investors (FPIs) as the biggest suppliers of dollars for two consecutive weeks, BusinessDay reports.
However, FBNQuest analysts are warning that Nigeria’s reliance on FPI flows provides near-term FX support but exposes the market to external shocks, given the sensitivity of these flows to global risk sentiment, interest rate movements, and domestic macro stability.
Source: Getty Images
Naira records mixed performance against the US dollar
On Tuesday, the value of the Naira moved in different directions at the foreign exchange (FX) market.
In the black market, traders revealed that the naira appreciated against the US dollar, but fell in the official market.
The Central Bank of Nigeria (CBN) data showed that in the NFEM window, which is the official market naira depreciated against the dollar by N1.16 or 0.08% to close at N1,534.93/$1 compared with the preceding day’s N1,533.77/$1.
While in the black market, Abudullahi, a BDC trader, said:
"We sold the dollar at N1,548/$1 on Tuesday compared with the N1,550/$1 it was exchanged on Monday."
External reserves on the rise
Earlier, Legit.ng reported that Nigeria's external reserves have improved significantly in recent weeks, giving the CBN enough firepower to defend the naira.
CBN data showed that Nigeria’s gross FX reserves rose to $40.654 billion, representing an increase of $70 million.
Analysts expect rates to moderate around the same level amid growing external reserves.
Experts have shared their opinions on why the exchange rate has stabilised and on corporate and foreign investors’ disposition toward the Nigerian economy.
Source: Legit.ng
