Nigeria’s foreign exchange market recorded a sharp improvement in liquidity in July as total inflows climbed 59 per cent month-on-month to $4.4bn, largely on the back of increased domestic dollar supply.
Data from FMDQ showed that domestic sources accounted for the bulk of the increase, with inflows from the segment more than doubling to $2.9bn in July from $1.3bn in June.
The Central Bank of Nigeria was the biggest contributor to domestic supply, increasing its foreign exchange sales to about $1.4bn during the month, compared with an estimated $320m in June.
The stronger intervention indicates an increasingly active role for the apex bank in supporting liquidity and helping to moderate pressure on the naira.
Exporters also supplied a substantial amount of foreign exchange during the month.
Export proceeds rose to $905.1m from $867.9m in June, supported by higher crude oil production and relatively firm oil prices.
Dollar inflows from Nigerian corporates equally strengthened, rising 38 per cent month-on-month to $579.5m from $420.2m.
Foreign sources, however, remained relatively subdued, with aggregate inflows holding broadly steady at $1.5bn in July.
Foreign portfolio investment, which remained the largest component of foreign FX supply, declined to $1.3bn from $1.4bn in June, reflecting continued caution among international investors amid an uncertain global environment.
Foreign direct investment provided a brighter spot, increasing sharply to $129.9m from $19.2m in the previous month.
The July figures therefore point to a growing reliance on domestic sources, rather than portfolio investors, for foreign exchange liquidity.
Analysts at Quest MB expect market liquidity to remain supportive in the coming months, citing stronger domestic participation, steady offshore inflows, continued CBN intervention and improved reserve levels.
However, they cautioned that “sustained exchange-rate stability would require Nigeria to attract more stable, long-term capital and reduce its structural dependence on short-term portfolio flows”.
