Market News

BY Hope Moses-Ashike 

The naira ended the week with a gain of N7.10 in the official foreign exchange market as foreign capital inflows surged to almost $21 billion in the first 10 months of 2025, marking one of the strongest investment rebounds Nigeria has recorded in years.

The performance of the currency over the five trading days of the week reflected renewed confidence from foreign investors, reinforced by recent policy reforms and improving macroeconomic conditions.

After Friday’s trading session, the naira appreciated by 0.5 percent, with the dollar quoted at N1,446.74 compared with N1,453.84 on Monday, according to data released by the Central Bank of Nigeria (CBN). Even though the currency slipped slightly by 0.2 percent from N1,443.90 at the close of trading on Thursday, it still recorded a stronger week overall.

On a week-on-week basis, the currency strengthened by N9.98 or 0.7 percent when compared with the closing rate of N1,456.72 on the corresponding Friday of the previous week.

At the parallel market, the naira weakened marginally by N5, closing at N1,465 on Friday compared to N1,460 on Monday, a movement traders attributed to short-term demand pressures in the informal segment of the market.

Olayemi Cardoso, governor of the CBN, speaking on Friday at the Bankers dinner in Lagos, disclosed that foreign capital inflows reached $20.98 billion between January and October 2025, representing a 70 percent increase over total inflows for 2024 and a remarkable 428 percent jump from the $3.9 billion received in 2023. He described the rise as a clear resurgence in investor confidence and confirmed that Nigeria had already received $21 billion in foreign portfolio investments as of October, the highest annual level ever recorded.

Tilewa Adebajo, chief executive officer of CFG Advisory, said their projections based on second- and third-quarter 2025 data had indicated that Nigeria would surpass $20 billion in FPI for the year, exceeding the previous record of $16 billion set in 2019. He noted that while FPIs have remained attracted to money market instruments and bonds over the past decade, investment in equities has declined significantly.

Despite the strong inflows, Adebajo stressed that the government faces growing pressure to maintain the reform momentum and address Nigeria’s persistent security challenges, which he described as a clear and present threat to the economy. He added that the government must restore fiscal discipline and roll out policies capable of stimulating long-term economic growth that directly impacts citizens’ living conditions.

Cardoso, in his keynote address at the Chartered Institute of Bankers of Nigeria’s 60th Annual Bankers Dinner, said the most visible sign of renewed confidence in the economy is the transformation in the foreign exchange market. He explained that the unification of multiple exchange-rate windows has been sustained over the past year and that the once-crippling multi-billion-dollar FX backlog has now been fully cleared, a development he said has restored credibility and enabled businesses to plan with greater certainty.

He highlighted the introduction of the Nigerian Foreign Exchange Code, which set new standards for transparency, ethics, governance, and fair dealing among authorised dealers. He also pointed to the deployment of the Electronic Foreign Exchange Management System powered by Bloomberg BMatch, which has improved FX trading through mandatory order submission, real-time regulatory oversight, and better price discovery.

According to him, these reforms have reduced opacity, curbed manipulation, and reintroduced discipline into the market. He said the naira now trades within a more stable and narrower range, with the gap between the official and parallel markets shrinking to under 2 percent from over 60 percent previously.

Cardoso also reflected on the strengthened external sector, noting that Nigeria’s current account balance rose by more than 85 percent to $5.28 billion in the second quarter of 2025 from $2.85 billion in the first quarter. Foreign reserves climbed to $46.7 billion by mid-November, the highest level in nearly seven years, providing more than 10 months of forward import cover and significantly enhancing the economy’s resilience. He emphasised that the growth in reserves was “organic,” driven by improved market functioning, stronger non-oil exports, and rising capital inflows rather than by external borrowing.

He added that while oil production improved modestly to an average of between 1.45 million and 1.52 million barrels per day in 2025, the standout performance came from non-oil exports, which grew by more than 18 percent year-on-year. Cardoso attributed this to ongoing reforms and greater exchange-rate flexibility, which increased competitiveness under a market-driven FX regime. Diaspora remittances also strengthened, rising by about 12 percent as confidence returned to official channels following improvements in transparency, settlement efficiency, and reporting. He said the recently introduced Non-Resident BVN is expected to deepen remittance inflows further as adoption expands in 2026.

Cardoso reaffirmed the CBN’s commitment to maintaining a flexible exchange-rate framework that allows the naira to serve as a shock absorber while ensuring excessive volatility is curtailed.

To further strengthen the framework, he said the CBN will soon unveil a revised FX Manual aimed at expanding market participation, tightening documentation standards, and enhancing surveillance through the EFEMS platform to ensure consistent implementation and prevent policy reversals.