By Chinwendu Obienyi
Foreign exchange (FX) inflows from non-bank corporates into Nigeria’s FX market rose sharply in July, offering some relief to dollar liquidity as the naira continued to face pressure.
According to data quoted from FMDQ by FBNQuest Merchant Bank, corporates injected about $1.2 billion into the market in July 2025, up from $800 million in June.
The rise signals stronger participation from private sector players, with analysts attributing the growth to improved export receipts, particularly from upstream oil companies, repatriated earnings, and greater use of formal FX channels.
Market observers noted that the increased inflows suggest confidence among corporates in engaging through official windows rather than relying on parallel-market transactions.
“Corporate inflows have become a more important component of the FX mix. Oil-linked revenues, coupled with efforts to formalise repatriated earnings, are helping to supplement portfolio investments, which remain volatile”, FBNQuest Merchant Bank said.
Overall FX inflows into Nigeria’s market climbed by 24 per cent month-on-month to $3.8 billion in July, up from $3.1 billion in June. Despite the improvement, inflows remained significantly lower than the $6.7 billion peak recorded in May, reflecting ongoing volatility in foreign currency liquidity.
Foreign Portfolio Investments (FPIs) continued to dominate as the single largest source of supply, contributing around 45 per cent of total inflows. Offshore investors injected $1.7 billion into the market, compared to $1.5 billion in June, supported by attractive carry-trade opportunities and relatively stable global macroeconomic conditions.
However, the reliance on short-term capital flows underscores Nigeria’s structural vulnerability.
FPIs are highly sensitive to changes in global risk appetite and interest rate shifts.They can leave as quickly as they come in, so the boost they provide needs to be complemented by more stable sources of FX.
The Central Bank of Nigeria (CBN) also stepped up its market presence in July, selling $326 million, compared to $183 million the previous month. The increase highlights the regulator’s commitment to stabilising the naira and smoothing out supply-demand imbalances.
Analysts at FBNQuest suggest that the CBN’s interventions were facilitated by a relatively stronger reserves position, giving the bank more room to provide liquidity. Still, the interventions fell short of offsetting market pressures, with the naira ending the month weaker.
Despite the uptick in inflows and CBN support, the naira depreciated by 0.13 per cent month-on-month to close July at N1,534/$1. Persistent demand for dollars, particularly from importers and investors hedging against currency risk, continued to weigh on the exchange rate.
“The naira’s performance reflects the mismatch between demand and supply,” a treasury executive at a Tier-1 bank said. “Even though inflows rose in July, they are not yet at levels that can sustain a stronger recovery.”
Looking ahead, the bank in its report said it expects FX inflows to remain uneven, influenced by both domestic and global factors.
“Sustained oil exports and improved private sector participation could support liquidity, but risks remain elevated due to global monetary policy shifts and uncertainties in Nigeria’s macroeconomic environment.
Foreign exchange inflows are recovering, but the structure of supply still makes the market vulnerable. Without deeper reforms to attract longer-term capital and diversify FX sources, volatility will remain a feature of the Nigerian FX market.” It said.
For now, the rise in corporate inflows offers some cushion. But with Nigeria’s currency still under strain and dependence on foreign portfolio inflows persisting, July’s rebound may prove fragile without stronger fundamentals.
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