Dollar inflows into Nigeria’s foreign exchange market rebounded by 38 percent month on month in December 2025, buoyed by increased foreign exchange sales from the Central Bank of Nigeria (CBN), according to data from FMDQ. Total FX inflows rose to $2.8 billion, reversing part of the sharp 67 percent contraction recorded in November. Despite the recovery, December’s inflow level remained the second weakest in the past 16 months, highlighting persistent vulnerabilities in FX supply. While inflows from domestic corporates dipped by 5 percent to $420 million, all other supply sources posted gains.
Analysts at FBNQuest attributed the rebound largely to stronger CBN intervention in the FX market. The apex bank’s FX sales more than doubled to $654 million in December, up from $318 million in November, reflecting efforts to shore up liquidity amid subdued offshore investor participation. Foreign portfolio inflows rose marginally by 7 percent to $632 million, a sharp slowdown from the $3.5 billion recorded in October, as foreign investors pared risk toward year-end for profit-taking and portfolio rebalancing.
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The naira traded largely stable during the period. At the Nigerian Foreign Exchange Market, the currency eased slightly by 0.1 percent, closing at N1,419.71 to the dollar on Thursday, compared with N1,418.26 a day earlier. In the parallel market, the naira remained flat at N1,490 to the dollar. Nigeria’s external reserves also edged higher, rising to $45.64 billion as of January 7, 2026, from $45.62 billion the previous day, strengthening the CBN’s capacity to manage FX volatility.
A breakdown of inflows showed that foreign direct investment, though still the smallest component, surged by 381.7 percent to $50.1 million in December from $10.4 million in November. On the domestic front, FX inflows from exporters and importers climbed by 49 percent to $683 million, while contributions from individuals jumped by 88 percent to $275.3 million, further supporting the month-on-month recovery.
CBN Governor Olayemi Cardoso said recent reforms, including the Nigerian Foreign Exchange Code and the deployment of the Bloomberg-powered Electronic Foreign Exchange Matching System, have improved transparency, governance and price discovery in the FX market. According to him, these measures have reduced opacity, curbed manipulation and narrowed the gap between official and parallel market rates to below 2 percent from over 60 percent previously.
Looking ahead, FBNQuest analysts expect renewed investor interest in the coming months, supported by attractive domestic yields and softer inflation expectations that could allow a more accommodative monetary policy stance in 2026. They added that a potentially more dovish U.S. Federal Reserve could also boost global risk appetite, supporting stronger capital inflows into Nigeria and other emerging markets.
