By Seun Ibiyemi
The Central Bank of Nigeria (CBN) has ramped up its sale of U.S. dollars in the foreign exchange market, a move that comes in response to a significant 12% drop in the nation’s foreign exchange (FX) inflows during the month of August.
The figure represents a 76% increase from $326 million sold in July, underscoring the apex bank’s effort to stabilise the naira.
Data from FMDQ Exchange showed that total FX inflows into Nigeria’s market fell by 12 percent month-on-month to $3.4 billion in August, down from $3.8 billion in July.
The decline followed a brief rebound in July, when inflows rose by 24 percent.
The drop was largely driven by weaker foreign portfolio inflows (FPIs), which contracted by 35 percent to $1.1 billion from $1.7 billion the previous month.
Analysts at FBNQuest warned that the slowdown highlights the vulnerability of portfolio flows, given global uncertainties that have dampened investor appetite.
Despite the dip, FPIs remained the single largest contributor to FX liquidity, accounting for 86 percent of foreign-sourced inflows and 32 percent of total market inflows.
Within this segment, fixed-income investments attracted $951 million, while equities recorded $139 million.
Foreign direct investment (FDI) remained subdued at just $22 million, down from $49 million in July, reflecting ongoing structural challenges.
Domestic inflows also slowed, with non-bank corporates contributing $826 million, a 28 percent drop from $1.2 billion in July.
However, export proceeds rose modestly to $654 million from $583 million, providing a more stable inflow source.
Meanwhile, the naira depreciated by N9.88 at the official market on Wednesday, trading at N1,494.01/$1 compared to N1,484.13 the previous day.
At the parallel market, the rate held steady at N1,525/$1, while Guaranty Trust Bank quoted N1,515/$1 for international transactions.
Despite the pressure on the naira, Nigeria’s external reserves climbed to $41.89 billion as of September 16, up 2.27 percent from $40.96 billion a month earlier.
FBNQuest analysts said they remain cautiously optimistic about FX liquidity trends in 2025, citing CBN’s sustained interventions and efforts to boost non-oil exports as key stabilising measures going forward.