Market News
Naira extends gains across FX markets despite dip in inflows
by Hope Moses-Ashike
The naira strengthened across segments of the foreign exchange (FX) market on Monday despite a decline in weekly FX inflows at the official window.
Data published by the Central Bank of Nigeria (CBN) showed that at the Nigerian Foreign Exchange Market (NFEM), the naira appreciated marginally by N1.54, with the dollar quoted at N1,429.30 on Monday, compared with N1,430.84 on Friday, the first trading day of the year.
In the parallel market, also known as the black market, the local currency also recorded gains, appreciating by 0.7 percent or N10 to close at N1,490 per dollar on Monday, from N1,500 on Friday.
Despite the gains in the naira, FX inflows into the NFEM window declined by 20.67 percent week on week to $593.70 million from $748.40 million in the previous week, according to a weekly report by Coronation Merchant Bank. The slowdown was attributed to softer market activity at the start of the year, alongside reduced participation from offshore investors.
Local sources remained the dominant contributors to FX inflow, accounting for 82.95 percent of total inflows. These were led by individuals, who contributed $165.1 million, followed by the CBN with $128.00 million and exporters and importers with $115.6 million.
On the external front, FX inflow weakened further, contributing just 17.05 percent of total inflows. Foreign portfolio investments declined sharply by 72.91 percent week on week to $46.00 million from $169.8 million in the prior week, while foreign direct investments fell by 81.87 percent to $7.00 million from $38.60 million previously.
Meanwhile, the CBN’s gross external reserves edged up by 0.58 percent, rising by $264.56 million at the start of the year to $45.50 billion, and increasing further to $45.56 billion as of January 2, 2025.
Analysts at Coronation Research said that in the near term, the naira is expected to trade within a relatively stable range at the official window, supported by CBN intervention and a seasonal easing of FX demand following year-end pressures.
