Digitnomics 
Nigeria’s foreign exchange market recorded a sharp decline in inflows in April, reflecting weaker participation from both domestic and foreign investors amid growing global uncertainty and reduced central bank intervention.
According to data from FMDQ Group, total FX inflows into the market fell by 30.1% month-on-month to $2.86 billion in April, compared to $4.09 billion recorded in March.
The slowdown highlights continued pressure on liquidity within Nigeria’s FX market despite ongoing monetary reforms and efforts to improve investor confidence.
CBN Interventions Decline Sharply
A breakdown of the data showed that domestic inflows dropped significantly during the period.
Local inflows, which accounted for 42.8% of total FX inflows, declined by 38.7% to $1.22 billion, down from $2.00 billion in March.
The decline was largely driven by lower participation from the Central Bank of Nigeria, whose inflows reportedly fell by 83% month-on-month.
Inflows from exporters and importers also weakened, alongside reduced participation from non-bank corporates and individual investors.
Foreign Investment Flows Also Weaken
Foreign inflows into the FX market also slowed during the month under review.
According to the data:
Foreign inflows declined 21.9% to $1.63 billion
Foreign portfolio investment (FPI) inflows fell 17.8%
Foreign direct investment (FDI) inflows dropped sharply by 78.9%
Foreign investors accounted for 57.2% of total market inflows in April.
Analysts say persistent geopolitical tensions, tighter global financial conditions, and cautious investor sentiment continue to pressure capital flows into emerging and frontier markets.
Global Risks Continue to Shape Investor Sentiment
Market analysts noted that offshore investors remain selective in deploying capital to frontier economies due to concerns around:
Global trade tensions
Slowing economic growth
Commodity price volatility
Rising global risk aversion
Analysts at investment firm Cordros Research said that while Nigeria continues to benefit from relatively attractive carry trade opportunities and ongoing FX reforms, external risks remain a key constraint on capital inflows.
FX Market Stability Still Dependent on Confidence
Despite the decline in April inflows, analysts believe Nigeria’s FX market could remain relatively supported in the near term due to:
Improved market transparency
Sustained monetary tightening
Ongoing reform measures
However, experts caution that the market remains vulnerable to external shocks given the critical role foreign investors continue to play in FX liquidity.
Market participants also expect the central bank to sustain interventions aimed at stabilising the naira and improving liquidity conditions.
Digitnomics Insight
Nigeria’s FX market remains highly sensitive to global capital flows and investor confidence. While ongoing reforms are improving transparency, sustained liquidity will depend on the country’s ability to attract stable foreign investment beyond short-term portfolio inflows.
