FX market inflows plunge by 26%, as CBN sustains six-week zero supply stance
Total dollar inflows into Nigeria’s foreign exchange market have dropped sharply by over 26%, falling to $689 million.
The significant decline is directly linked to a complete absence of foreign exchange injections by the Central Bank of Nigeria (CBN) for six consecutive weeks.
According to data compiled by Coronation Research, the supply gap has forced the market to rely heavily on autonomous sources to support liquidity amid rising demands for foreign payments in the Nigerian Foreign Exchange Market (NFEM).
Exporters stepped up as the largest single contributor to official FX inflows during the review week, supplying 43.30% or $298.30 million of the total volume.
Foreign Portfolio Investors (FPIs) followed closely, generating 39.26% or $270.50 million.
Non-bank corporates contributed 14.36% ($98.90 million), while other corporate entries and miscellaneous sources accounted for the remaining balance.
The supply contraction triggered mild pressure at the official NFEM window, where the local currency depreciated by 0.48% week-on-week to close at N1,370.46/$1, down from N1,363.83/$1 the previous week.
Despite starting the week with a 0.56% appreciation to N1,356.27/$1, the lack of depth eventually erased the early gains.
Conversely, the parallel market provided a contrasting narrative as the Naira strengthened by 0.36% to close at N1,400.00/$1 compared to N1,405.00/$1 in the preceding week.
The divergent movements narrowed the parallel market premium down to 2.16%, demonstrating a stronger price convergence across both windows.
On the macroeconomic front, the nation’s external defense mechanisms remained resilient. Nigeria’s gross foreign exchange reserves gained 1.05% week-on-week, expanding by $529.71 million to reach $51.04 billion.
Looking ahead, financial analysts expect the exchange rate to hover around current thresholds, supported by steady portfolio injections and resilient autonomous inflows despite the apex bank’s hands-off approach.