The Nigerian naira has maintained relative stability in the foreign exchange (FX) market, even as the Central Bank of Nigeria’s (CBN) dollar inflows fluctuate and external reserves trend downward.
According to the latest data from the CBN, Nigeria’s gross external reserves fell by 8 per cent year-to-date, declining to $37.84 billion as of April 28, 2025, from $40.88 billion at the start of the year. Despite this, the naira has recorded modest gains since January, following the introduction of the Electronic Foreign Exchange Matching System (EFEMS) and updated foreign exchange codes by the apex bank.
At the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira appreciated by 3.8 per cent against the US dollar over the last four months, closing at N1,599.70 per dollar on Tuesday, compared to N1,661.12 on December 2, 2024, when EFEMS transactions began.
Similarly, in the parallel market — commonly known as the black market — the naira gained 3.2 per cent or N52 year-to-date. The dollar was quoted at N1,608 on Tuesday, down from N1,660 in January 2025.
Dollar Inflows and Market Performance
A report by Coronation Merchant Bank Limited showed that dollar inflows through the NAFEM window stood at $735 million last week, compared to $1.42 billion the week before. The CBN accounted for 33.47 per cent of total inflows, while foreign portfolio investors (FPIs) contributed 11.99 per cent. Non-bank corporates provided 31.76 per cent, exporters 21.17 per cent, and other sources 1.61 per cent.
Despite fluctuating inflows, the naira remained resilient, gaining 0.02 per cent week-on-week against the US dollar in the official spot market, closing at N1,599.55/$1. In the forward contracts market, the one-month rate settled at N1,650.54/$1, the three-month rate at N1,730.03/$1, six-month at N1,846.90/$1, and the one-year forward contract closed at N2,074.22/$1.
In the parallel market, the naira strengthened by 0.31 per cent, closing at N1,599.55/$1 on April 25, 2025.
Post-Easter Surge in Dollar Sales
Following the Easter holiday, the CBN recorded its highest weekly dollar sale, accounting for 50 per cent of market inflows. However, by Tuesday, the naira slightly depreciated by 0.2 per cent in NAFEM trading, with the dollar quoted at N1,602.63 compared to N1,599.93 before the holiday.
Foreign Reserves and FX Inflows Outlook
The latest Coronation Merchant Bank Research revealed that foreign exchange inflows through NAFEM reached $1.42 billion, up from $847 million the previous week. The CBN contributed 50.60 per cent of the inflows, FPIs 8.61 per cent, non-bank corporates 25.14 per cent, exporters 12.99 per cent, and other sources 2.66 per cent.
Despite increased inflows, Nigeria’s gross foreign reserves slipped by 0.39 per cent week-on-week to $37.88 billion as of April 16, 2025. The naira also weakened slightly against the Chinese yuan, depreciating by 0.44 per cent to close at N219.16/CNY.
Foreign Exchange Market Dynamics
Net foreign exchange inflows into Nigeria’s economy fell to $4.79 billion in January 2025, down from $5.01 billion in December 2024 — a 4.4 per cent drop, according to the CBN’s latest data. The decline was attributed to reduced inflows through official channels, while total FX inflows also decreased to $9.63 billion in January from $10.17 billion in December.
On the outflow side, total FX outflows declined to $4.84 billion in January from $5.17 billion the previous month. The CBN’s own inflows fell significantly to $2.33 billion in January from $4.09 billion in December, while autonomous inflows increased to $7.31 billion from $6.08 billion, indicating growing participation by private FX market players.
Similarly, outflows through the CBN dropped to $3.80 billion in January from $4.16 billion a month earlier, with autonomous outflows rising marginally to $1.04 billion.
The market’s shifting dynamics resulted in a net outflow of $1.47 billion through the CBN in January, compared to a marginal $0.07 billion net outflow in December. In contrast, net inflows from autonomous sources improved to $6.26 billion in January, up from $5.07 billion in December, highlighting the increasingly critical role of private and independent FX inflows in Nigeria’s foreign exchange landscape.
