Nume Ekeghe

Total inflows into the Nigerian Foreign Exchange Market (NFEM) stood at $2.80 billion in August, according to data from FMDQ, underscoring the continuing resilience of local participation even as foreign investors moderated their activity.

The figure, though lower than the $3.83 billion recorded in July, highlights the balance of contributions from both offshore and domestic sources. Analysis of the data showed that foreign inflows accounted for 38 per cent of the total at $1.06 billion, while domestic sources provided the larger share of 62 per cent, or $1.74 billion.

Analysts at Cordros Securities observed that foreign exchange inflows from both local and offshore sources are likely to remain firm in the near term, with volumes expected to exceed the 2024 full-year average of $2.51 billion. They attributed this outlook to improving market sentiment and the continued appeal of Nigeria’s naira yields to foreign portfolio investors (FPIs).

According to FMDQ data, total inflows into the Nigerian Foreign Exchange Market, NFEM, fell by 26.9 per cent m/m to $2.80 billion in August, from $3.83 billion in July, reflecting declines across both foreign, 38.0 per cent of total, and local, 62.0 per cent of total, sources.

They said, “Foreign inflows dropped to a four-month low of $1.06 billion, down 61.0 per cent m/m, driven largely by weaker participation from FPIs, down 65.8 per cent m/m, and FDIs, down 25.2 per cent m/m, partly cushioned by higher accretion from other corporates, up 165.5 per cent m/m.

“On the domestic front, inflows contracted by 17.9 per cent m/m to $1.74 billion, as declines from exporters/importers, down 32.8 per cent m/m, and non-bank corporates, down 32.7 per cent m/m, outweighed sharp increases from individuals, up 413.8 per cent m/m, and the CBN, up 118.9 per cent m/m.

“In the near term, we expect foreign exchange inflows from both local and foreign sources to remain strong, surpassing 2024 levels, with the 2024FY average at $2.51 billion, driven by improving market confidence and still-attractive naira yields for foreign portfolio investors, FPIs.”

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