…Slumps to $4.84bn as CBN, citizens cut supply to FX market
…No steady dollars, no export lifeline –Experts warn
By Chinwendu Obienyi
Nigeria’s supply of US dollars into its official foreign exchange market (NFEM) dropped sharply to $4.84 billion in June 2025.
This is a 28.1 per cent fall compared to the $6.74 billion recorded in May, according to data obtained by Daily Sun.
Analysts say the drop is worrying and could make the country more vulnerable to external shocks, especially since local sources of FX, like exporters and the Central Bank, have reduced their contributions and the country is depending more on foreign investors for dollars.
Data from FMDQ, shared by Cordros Securities in its latest market report, showed that dollar inflows from local sources dropped significantly by 61.4 per cent, falling to a four-month low of $2.11 billion. This now makes up just 43.7 percent of total dollar inflows.
The breakdown shows that individual contributions to the FX market dropped by a massive 91.6 per cent. The Central Bank of Nigeria (CBN) also reduced its own supply by 77.2 per cent, while inflows from exporters/importers fell by 74.4 per cent. Non-bank corporate inflows also declined, though by a smaller margin of 17.6 per cent.
Meanwhile, foreign sources of FX increased by 116.8 percent month-on-month, reaching $2.73 billion in June, the highest level in over two years. This was driven by growing confidence among foreign portfolio investors (FPIs), who increased their inflows by 133.6 per cent, likely encouraged by high interest rates at recent CBN auctions and cautious optimism about ongoing FX reforms.
But experts are warning that this growing reliance on foreign investors is risky, especially because their investments, often called “hot money”, can leave the country just as quickly as they came in.
David Adonri, Vice-Chairman of the Board at Highcap Securities Limited, said: “The sharp drop in local contributions, especially from the CBN and exporters, suggests that confidence among domestic actors is fragile, while the rise in foreign inflows is mainly ‘hot money,’ which can reverse quickly.”
He added that unless Nigeria boosts steady local FX sources, like non-oil exports and remittances, its move toward allowing the market to set the naira’s value could be at risk over time.
Since taking over, CBN Governor Olayemi Cardoso has been gradually stepping back from direct intervention in the FX market.
This is part of the bank’s strategy to reduce inflation and let market forces determine the exchange rate. But the latest data shows that individuals and exporters are not yet stepping in to fill the gap left by the CBN.
Johnson Chukwu, Founder of Cowry Asset Management, said relying too much on foreign short-term money is not a safe strategy.
“If foreign investors perceive any risk, whether global or domestic, they will exit, putting renewed pressure on the naira,” he warned.
Looking ahead, Cordros Securities believes foreign portfolio inflows might continue to rise for now, thanks to attractive interest rates and a stable market. But they also note that the situation is still shaky. If there’s a global financial shake-up or if Nigeria slows down its reforms, foreign interest could drop again.
“In the near term, we anticipate that foreign exchange inflows (particularly from FPIs) will continue to improve, supported by growing market confidence and elevated stop rates at OMO auctions.
However, the lingering global trade uncertainties remain a downside risk to inflows from foreign counterparts, potentially constraining growth in the overall liquidity of the NFEM,” the Cordros report stated.
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