MON JULY 06 2026-theGBJournal| Nigeria’s foreign exchange market recorded a sharp slowdown in liquidity in June, with total inflows falling more than one-fifth from the previous month as weaker foreign portfolio investment and declining domestic dollar supply offset gains in foreign direct investment and retail inflows, underscoring the persistent fragility of foreign exchange availability despite ongoing market reforms.
According to data released by FMDQ, total inflows into the Nigerian Foreign Exchange Market (NFEM) declined by 20.7% month-on-month to $3.31 billion in June from $4.17 billion recorded in May.
The decline reflected broad-based weakness across both domestic and foreign sources of foreign exchange supply.
Domestic inflows accounted for 48.9% of total market inflows during the month but contracted sharply by 30.1% month-on-month to $1.62 billion, down from $2.32 billion in May.
The weakness was driven primarily by lower dollar supply from exporters and importers, whose inflows fell 32.5% from the previous month. Non-bank corporate inflows also weakened significantly, declining 30.5%, while inflows from the Central Bank of Nigeria (CBN) dropped 12.1%, reducing official participation in the market.
The only bright spot within domestic sources came from individual participants, whose foreign exchange inflows surged 70.0% month-on-month, partially cushioning the broader decline in local market liquidity.
Foreign investors remained the largest contributors to the market, accounting for 51.1% of total inflows.
However, foreign inflows also moderated, declining 9.0% month-on-month to $1.69 billion in June from $1.86 billion in May.
The decline largely reflected weaker portfolio investment activity, as investors reduced participation in Nigeria’s financial markets despite improvements elsewhere.
Foreign portfolio investment (FPI) inflows declined 13.9% month-on-month, outweighing stronger contributions from longer-term capital.
Within the FPI segment, inflows into fixed-income securities fell 16.3%, more than offsetting a robust 43.8% increase in equity-related inflows.
The contraction in portfolio flows came even as foreign direct investment (FDI) posted a strong recovery, rising 37.8% from the previous month. Inflows from other corporate investors also recorded exceptional growth, jumping 324.9% month-on-month, although these gains proved insufficient to offset the overall weakness in portfolio capital.
The June figures suggest that while longer-term investment sentiment showed signs of improvement through stronger FDI and corporate inflows, Nigeria’s foreign exchange market remained heavily constrained by softer portfolio flows and weaker domestic dollar supply.
The decline in exporters’ receipts, reduced corporate inflows and lower CBN participation collectively outweighed improvements in equity investment and retail inflows, resulting in a significant contraction in overall foreign exchange liquidity during the month.
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