The naira extended its upward momentum yesterday bolstered by a sharp rise in foreign exchange (FX) inflows, which grew by 26 percent year-on-year, according to data published by the Central Bank of Nigeria (CBN).
At the Nigerian Foreign Exchange Market (NFEM), the naira strengthened by 0.3 percent, closing at ₦1,521.46 per dollar, compared to ₦1,526.05 the previous day.
In the parallel market, the exchange rate remained stable at ₦1,535 per dollar, while GTBank quoted international transaction rates at ₦1,534 per dollar.
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CBN’s Quarterly Economic Report revealed that FX inflows reached $29 billion in Q1 2025, up 4 percent quarter-on-quarter and 26 percent year-on-year.
However, outflows also rose significantly, climbing 14 percent q/q and 33 percent y/y to $13.8 billion, the highest quarterly outflow since Q2 2020.
This left net inflows at $15.2 billion, slightly below the $15.8 billion recorded in Q4 2024.
Analysts at FBNQuest attributed the robust inflows primarily to autonomous sources, which surged to $20.7 billion, the strongest level since the COVID-19 pandemic.
Foreign portfolio investment (FPI) inflows rose 40 percent q/q and 101 percent y/y to $4.9 billion, supported by elevated interest rates and the CBN’s FX reforms.
In contrast, FX inflows through the apex bank fell to $8.3 billion, down from $11.5 billion in the previous quarter.
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On the outflow side, CBN-related disbursements accounted for 77 percent of the total at $10.5 billion, largely driven by a 29 percent y/y increase in external debt service payments, which reached $1.4 billion. Meanwhile, autonomous outflows jumped 125 percent q/q to $3.2 billion.
Despite the rising outflows, analysts noted that the surge in autonomous inflows has supported exchange rate stability so far in 2025, with the naira largely trading between ₦1,500 and ₦1,600 per dollar.
Looking ahead, they added that potential monetary easing by the U.S. Federal Reserve, combined with sustained FX reforms at home, could further strengthen portfolio inflows if the CBN maintains its tight monetary stance.
IMage Credit: Businesss Day
