Foreign exchange inflows into Nigeria surged by 62% month-on-month to $5.96 billion in May, up from $3.67 billion in April, according to data from FMDQ Exchange.
This rise was largely driven by strong domestic participation and growing investor confidence, which also contributed to the naira appreciating to N1,551 per dollar.
Domestic sources were the primary driver, accounting for 83.2% of total inflows. Local forex supply rose to a six-year high of $4.96 billion, marking a 64.2% increase.
The sharpest gains came from exporters and importers, whose contributions jumped to $3.11 billion in May, up from just $655.7 million in April. Non-bank corporates added $1.11 billion, slightly higher than April’s $1 billion, while inflows from individuals rose significantly to $91.4 million from $15.1 million.
Meanwhile, the Central Bank of Nigeria (CBN) scaled back its forex supply to $649.8 million, down from $1.35 billion the previous month.
On the external front, foreign inflows climbed 51.7% to $997.6 million, the highest in three months, indicating renewed offshore investor interest amid improved global market conditions.
Foreign portfolio investments (FPIs) rose by 61.3% to $880.8 million, while corporate foreign inflows increased by 10% to $83.9 million. However, foreign direct investment (FDI) slipped slightly by 6.3% to $32.9 million.
Analysts attribute the uptick in foreign interest to the CBN’s recent monetary tightening and continued Open Market Operations (OMO) auctions, which have offered attractive yields to investors.
This also contributed to the naira’s 2.3% week-on-week appreciation last week.
Investor sentiment was also reflected in the money market, where the Overnight (OVN) rate edged up by one basis point to 27.0% due to a liquidity squeeze from the N1.51 trillion OMO auction.
Despite this, the financial system remained in a net positive liquidity position of N628.90 billion, although it declined from N1.88 trillion the week before.
Looking ahead, analysts expect the maturity of OMO bills worth N263.33 billion to boost system liquidity in the short term, potentially easing interest rates unless offset by further CBN interventions.
