Despite weakening foreign exchange (FX) inflows into Nigeria, the naira has demonstrated resilience, maintaining relative stability in both the official and parallel markets. Recent data from the Central Bank of Nigeria (CBN) and market intelligence reports show that the local currency is holding firm against the U.S. dollar, even as total FX inflows show signs of softening.
At the Nigerian Foreign Exchange Market (NFEM) on Monday, August 4, 2025, the naira appreciated slightly by 0.1%, with the dollar quoted at N1,531.95, compared to N1,533.74 recorded on Friday, August 1. This modest gain of N1.79 comes amid broader concerns over declining forex receipts, a critical indicator of Nigeria’s balance of payments health.
In the parallel market, often referred to as the black market, the naira remained flat at N1,560/$1, unchanged from last week. However, the local currency had earlier weakened from N1,530 to N1,560 due to increasing demand pressure, especially from importers and speculative buyers.
According to a weekly update from Coronation Merchant Bank, total FX inflows dropped to $791.10 million, down from $979.10 million the previous week—a concerning decline of over 19%.
Foreign Portfolio Investors (FPIs) contributed $60.90 million, representing 7.70% of the total inflows. Other international sources remained negligible at 0.76%. In contrast, domestic inflows surged, with non-bank corporates nearly tripling their contributions to $483.60 million (61.13%). Exporters and importers followed with $168.60 million (21.31%), while inflows from the CBN and individuals stood at $68.40 million (8.65%) and $3.50 million (0.44%), respectively.
This shift suggests a growing reliance on domestic sources to stabilize Nigeria’s forex ecosystem, particularly at a time when foreign inflows are becoming increasingly uncertain.
One of the bright spots supporting naira stability is the International Monetary Fund’s (IMF) recent upward revision of Nigeria’s economic growth forecast, which has helped to boost investor confidence and reduce speculative demand for forex.
At the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira appreciated by 0.06% on a weekly basis, closing at N1,533.74/$ from N1,534.72/$ the previous week. The parallel market rate held steady at N1,540/$, leaving a minimal street premium of N6.26 (0.41%), which signals a narrowing gap between official and unofficial rates.
Meanwhile, Nigeria’s gross external reserves continued to rise for the fourth straight week. As of Wednesday, July 30, 2025, reserves stood at $39.36 billion, marking an increase of $726.80 million (1.88%) week-on-week.
Analysts at Coronation Merchant Bank expect the naira to continue trading within the N1,500–N1,600/$ range, bolstered by sustained reserve accretion and improved macroeconomic outlook. However, they warned that sluggish FX inflows could limit further naira appreciation, with market sentiment remaining highly sensitive to investor participation, oil prices, and fiscal reforms.
They also noted that structural reforms such as FX unification and tighter monetary policy have helped reduce speculative attacks on the naira. Yet, the full impact of these reforms will depend on the government’s ability to attract more long-term foreign direct investment and sustain reserve buffers.
Nigeria’s recent efforts to boost non-oil exports, stabilize petroleum product supply, and encourage diaspora remittances are part of broader strategies to ease FX pressures. Still, analysts say stronger institutional coordination and policy clarity are required to unlock more sustainable inflows in the medium term.
While Nigeria’s FX inflows may be slowing, the naira’s stability amid these challenges is a sign of improved resilience. Continued macroeconomic reforms, rising reserves, and reduced arbitrage opportunities appear to be cushioning the effects of dwindling foreign inflows, at least in the short term.