By Ada Samson, Abuja
Nigeria’s foreign exchange market recorded a substantial inflow of $2.80 billion in August, with domestic participants providing the majority of funds, underscoring a shift toward greater local liquidity support.
The figure, reported by FMDQ, reflects a 26.9 per cent decrease from the $3.83 billion recorded in July but highlights the growing significance of home-grown investors in market stability.
A detailed breakdown reveals that foreign inflows accounted for 38 per cent of the total, amounting to $1.06 billion. This component fell to a four month low, declining 61.0 per cent month-on-month.
The contraction was largely driven by reduced participation from foreign portfolio investors, whose contributions fell 65.8 per cent, and foreign direct investment, which dropped 25.2 per cent.
In contrast, domestic sources supplied 62 per cent of the inflows, equating to $1.74 billion. Although this represented a 17.9 per cent decrease from July, it continued to demonstrate resilient local engagement.
Notably, inflows from individuals surged by 413.8 per cent, and interventions from the Central Bank of Nigeria increased by 118.9 per cent, partly offsetting declines from exporters and importers and non-bank corporates.
Analysts at Cordros Securities provided a positive near-term outlook, stating that “foreign exchange inflows from both local and foreign sources are likely to remain firm.” They anticipate that future volumes will exceed the 2024 full-year average of $2.51 billion, supported by improving market confidence and the continued appeal of naira yields to foreign investors.
This robust domestic participation has become a critical buffer amid fluctuations in foreign investor activity, contributing to the overall stability and liquidity of Nigeria’s foreign exchange market.
The data indicates a healthy balance between local and offshore contributions, reinforcing analyst expectations of sustained inflows in the coming months.
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